Is it worth getting an accountant/wealth advisor as an associate?
Hey WSO'ers - I'm heading into PE in a bit and will be clearing ~$300K a year. At that amount of money, should I get an accountant or wealth advisor? Taxes are probably going to go up over the next few years, and I'd really like to reduce my tax burden especially if Dems are writing tax policy over the next few years. I'm wondering if anyone else in a similar position has gotten an accountant or if it's even worth it for me at this stage of life?
It depends. Income is one part of it, but so is complexity. You can be 25, make $300k a year in salary, rent, and take the standard deduction. In that sort of situation it isn't too tough to read up a bit on tax advantaged accounts and whatnot and and do everything yourself.
Uncle Sam incentivizes certain things like giving to charity, owning a house, etc. Do you have a bunch of these? Do you have dependents that would be up $h!t creek if you were run over by a bus tomorrow? Do you have a set retirement goal? (and by this I mean I want to retire in X years with $XXX/yr in income for the rest of your life) Don't feel obliged to say yes here. I'm 35, have both my CFA Charter and CFP and can confidently say that I don't have solid retirement plans. (I'm still saving though) The more 'yes'es you have here the more a financial planner and/or accountant starts to make sense. Just remember, they all get paid somehow and if you're not the one paying you're the product, not the client.
To be blunt, wealth advisors at your income level really suck.
I would speak to a very good accountant and always pay for a second opinion too right until the lookback period for tax adjustments.
If you're getting paid via vanilla salary/bonus/etc... then maybe not really worth it as much. YMMV.
...and like the poster above said, it really depends on how complex your life is. Lots of RE, married, kids? Then probably easier to make the math work.
I'm a wealth advisor and have been for 30+ yrs. I agree with an earlier poster in that it's really more about complexity than figures. I started using a CPA when I was 35 because I started a business. Needed to do both personal and business returns and the business returns get more complex. Then we started adding more LLCs for RE ownership which made it even more complex. Up to that point, was really not a problem doing my own taxes.
On the wealth advisor side, again complexity. Are you single? Do you have kids? If so you certainly need a will for guardianship purposes. You 're in the accumulation stage of investing. That's pretty simple and the most important thing is that you do it consistently while staying true to your risk tolerance. An advisor can easily help you with that AND you can easily do that yourself. Either way get educated on the various asset classes, tax structures, etc. Gets far more complex when you get into real retirement / income planning, wealth transfer, tax planning, etc. But for now, if it's as simple as picking a few low cost ETFs or building your own stock portfolio, not a big deal (just make sure you cover the risk appropriately).
I thought I was the oldest guy around here. Wow, you might even be older than me!
It really just comes down to time and knowledge. Do you want to file your own taxes or have someone else do it? If you work 80 hours per week, you should probably hire an accountant. What do you know about investing? If the answer is a lot, you can probably do it yourself. If there answer is not that much, hire someone who knows more than you.
Eh... I'm going to dance back to complexity. Even with two states (work in one, live in the other) and a Schedule A it took me about an hour to fill out last year's taxes by hand. Normally it's under 45 minutes. I am more towards the simple end of the spectrum I outlined before though.
I have employed a CPA friend of mine in the past when I had a screwy state tax situation where I was employed in one state and lived in another for part of the year, then lived in that state while being employed in a third. THAT was complex.
It takes me way too long. I have 2 schedule Cs and I am just not that efficient when it comes to doing my own taxes. I was using an accountant but I had issues with the IRS when I used this person. The person left this part of the tax business and I have not been looking for someone to replace her. Even if you use an accountant, you still have to do some of the work.
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