Monday, 8 May 2017

Do You Need an Accountant or a Financial Planner?

By Miriam Caldwell
Updated July 25, 2016
When you are looking for financial advice, you may be trying to decide between an accountant or a financial planner. You may need just one or both. There will come a point in your finances when it makes sense to have additional help figuring out the best way to invest or to file your taxes. You may need help with creating a budget or setting up a system that helps you manage your money.

When Should You Use an Accountant?
Most people do not need an accountant.

An accountant is there to help you with specific issues that most people do not have. However, there are situations where using an accountant can help you save money.

If you are extremely wealthy or own and operate a business, you may consider getting an accountant to help you understand the laws surrounding your bookkeeping and taxes.
If you have real estate property and rentals you may also consider getting an accountant. This is like owning your own business and an accountant can help you predict cash flow.
Another reason someone may consider getting an accountant is when it is time to do your taxes. Again you should be able to do your taxes yourself with the tax preparation software, but if you own your own business or have the extra money or big investments you may consider finding a CPA or tax specialist to do your taxes for you. If you are ever confused one year, because you adopted a child, or had another unusual event, then getting an accountant can put your mind at rest. You may only need to visit the accountant for the one year. It is nice to have someone you can consult when your situation changes.
When Should You Use a Financial Planner?
If you are looking for advice on budgeting, getting out of debt or investing you may be looking for a financial planner. A financial planner can work in two different ways. One way is as an adviser who you pay a fee to help you plan a budget and work out a financial plan for you to build wealth.

The other way is that the financial planner receives a commission on the products that he sells to you. A good financial planner will encourage you to get out of debt before you seriously begin investing your money. If you need help setting up your plan to get out of debt or your budget you may be better off finding a financial planner who you pay to meet with. This financial planner can also help you when you are ready to begin investing your money. Your bank may offer financial planning services or you can ask friends for referrals to their financial planners.

You may need a financial planner if you are ready to start investing your money in the market. Your financial planner can help you determine the best investments to help you reach your financial goals.
A financial planner can also help you create a budget and work on getting out debt. He can help you create a long-term financial plan for things like retirement and paying for college for your kids.
Do You Need Both?
If you own your own business, your accountant and financial planner should be working together with you to help you realize your dreams. Some accountants also work as financial planners. It is important to trust both your financial planner and your accountant.

They should be able to explain the issues regarding your finances in a way that you understand. You should understand the risks with each investment before you make it. As a small business owner, you should understand how your books are set up and the information you need to input each day. an accountant is a real asset if you own a small business. If you work for someone else, and your tax situation is fairly straightforward, then you can get by without utilizing the services of one. It is not a bad thing to see an accountant, but it may not be necessary to spend the money on one if your financial situation is simple and straightforward. You should carefully choose your accountant, by asking friends and relatives for recommendations, the same way you would with a financial planner.

source - thebalance