What does a personal tax advisor do?
Can I be honest with you? The tax profession is a complex and diverse industry. There are so many different types of tax and areas of specialties. With all the various areas of tax come even more titles associated with the tax professionals who serve those areas. It’s hard for people to know whether they need or want a CPA, a preparer, an advisor, an accountant or a specialist. I find many prospective clients are less concerned with the various nuances involved with the many types of professionals in the tax arena. What they really want to know is if the professional can help them. When you get right down to it, the bottom line is: Can you accurately prepare the return I need to file? My simple answer is: yes.
If you’re still with me after the 1st paragraph, YAY! I’m really passionate about tax and am eager to share with you what it is I do and how it may benefit you!
Let me start by giving a description of the professionals I mentioned above so you can have an idea of what these people do and how they can be helpful to you:
Preparer: A tax preparer has been trained to prepare tax returns. A tax preparer’s knowledge can be diverse in the types of returns they have been trained to prepare. Preparers can be highly specialized or generalists. Most tax professionals start out as prepares, the entry level into the tax field. A good preparer can prepare your return and give you a good explanation of tax rules as it relates to your tax return.
Accountant: An accountant compiles and analyzes financial transactions and reports. Some accountants have been trained to prepare taxes and typically will prepare a tax return relevant to their clients. Accountants can be highly specialized or generalists. A good accountant possesses knowledge of accounting principles needed to accurately pull together financial data.
CPA: A CPA, also known as a Certified Public Account, is an accountant that has met the educational and experience requirements (which vary from state to state), in addition to having passed the CPA exam. A good CPA will be able to perform the same functions of both a preparer and an accountant, as well as sign off on financial statements and audits of financial statements that provides various levels of assurance. Assurance is the comfort level people can take in relying on audited, reviewed or compiled financial statements. A CPA can specialize in areas of taxation, though the primary function of a CPA is financial statement assurance.
Specialist: A specialist is a highly trained and experienced tax professional that focuses in one area of tax. A good specialist would be an expert in their field and would know a great deal (if not everything) about that area. A specialist would be able to prepare the related return to their area of specialty, and help you maneuver through the related tax laws.
Tax Advisor: A tax advisor, like a financial advisor, focuses on helping people reach their goals from tax perspective. A tax advisor understands tax law and uses that law, along with the understanding of the client’s ultimate goal, to pull together a strategy that will guide that client, step-by-step, in accomplishing that goal. Tax advisors, can be highly specialized or generalists. A good tax advisor, even specialized, will have a good understanding of how tax law works as a whole, be able to find answers in areas outside of their specialized area, translate financial data to prepare a return, and prepare the tax return that reflects the desired results of a sound tax plan.
The list that I’ve provided isn’t all-encompassing, but gives a few examples of different tax professionals. The key thing to take away is any of these types of professionals can provide great services and prepare your tax return. You should take time to meet with your potential professional and let them share what they have to offer.
Don’t have a professional? Ask Ms. Tax!