1) How Do You Know if You Need a CPA?
2) Services CPAs Provide
3) Factors to Consider When Choosing a CPA
4) Questions to Ask Before Choosing a CPA
5) How to Get the Most Value From a CPA's Services

How Do You Know if You Need a CPA?

You should consider seeking the advice of a CPA if:

You marry, separate, divorce, or your spouse dies

You have sold or are planning to sell inherited real estate or securities.

You are self-employed and want to take all the deductions to which you're entitled.

You move into or out of the DC area and you owe taxes in two states.

You aren't sure whether or not to itemize deductions or take the standard deduction.

You pay foreign taxes or hold an investment that is subject to foreign tax.

You support a child, grandchild, or parent who may qualify as a dependent.

You have lost property in a flood, earthquake, or other natural disaster.

You and/or your spouse are nonresident aliens.

Your work takes you out of the United States.

You receive incentive stock options.

You become subject to the Alternative Minimum Tax because of high income or high deductions.

You have a "SEP" IRA or Keogh account.

Your employer offers a "cafeteria" plan with multiple alternatives and/or 401(k) and you're not sure how to maximize your benefits.

You are or are about to become a trustee, executor, legal guardian or conservator.

You are nearing retirement and own a piece of property or other asset that generates low income relative to its worth.

You wish to sell or transfer an asset in a way that minimizes your exposure to capital gains tax and leaves you more proceeds for reinvestment and higher retirement income production.

You hold an IRA with significant value.

You are nearing age 70 and approaching the time when you must begin taking distributions from your IRA.

You wish to consider estate taxes and other variables in determining the size of your IRA distributions.

You win a large prize in a lottery or sweepstakes and receive a Form 1099.

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Services CPAs Provide

Auditing and Accounting Services

preparing, compiling, reviewing, and auditing financial statements

examining a company's financial records, transactions and reporting procedures to ensure a company's financial position is reported fairly to its stockholders

Tax Advisory Services

suggesting short-term and long-term strategies for lowering tax liabilities

helping clients comply with tax laws

providing retirement and estate planning to reduce the impact of estate and inheritance taxes

preparing tax returns

assisting clients with federal, state and local tax problems and representing individuals before government agencies

Personal Financial Services

devising savings and investment strategies

providing personal financial planning advice regarding such things as saving for a child's education, buying a new home, planning for retirement, estate planning

assisting clients in securing loans and credit by gathering information required by a lending agency

projecting future income and expenses

Business Financial Services

conducting special studies on financing, inventory management, cost control, credit, and collection for business, government and nonprofit organizations

consulting on accounting aspects of business problems

developing budgets and forecasts

auditing financial statements and reporting on them for the client's use with investors, creditors, and management

setting up accounting systems

performing compilation and review services

assisting clients in obtaining financing

Management Consulting

reviewing and setting up management information systems that meet a company's needs

evaluating the results of operations and forecasting the effects of alternative plans to facilitate management decisions

analyzing operations and suggesting changes in structure and individual responsibilities

helping clients institute a corporate planning process to control current operations, manage risk, translate long-range plans into attainable goals, and increase profits and market share

helping businesses improve the use of their resources, increase their efficiency, and achieve their objectives

Human Resources Consulting

providing recommendations for compensation policies and practices

designing compensation, fringe benefit and retirement plans for businesses

assisting in the development of job descriptions, personnel policies, systems and manuals

Litigation Consulting

assisting attorneys in litigation situations by analyzing financial data, developing damage studies or business valuations and serving as expert witnesses in court

dealing with attorneys and bankers in business mergers or expansions

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Factors to Consider When Choosing a CPA

It's important to establish a practitioner's credentials before you retain his/her services. You need to feel that this person has integrity and honesty before you will trust him or her with your financial information. Ask friends and colleagues for references and interview the practitioner. Be aware that fee structures vary and that different types of practitioners have different levels of training and experience. CPAs are the most highly educated and trained tax professionals and are distinguished by their state certification.

Keep in mind that you are looking to establish a long-term relationship. You want someone who will learn your business inside and out, who will become a trusted advisor on major business and financial decisions and transactions. Look not only for technical competence but also for interpersonal and communication skills.

Think ahead. Defining your objectives and expectations will help you ask the kind of specific questions necessary for finding the CPA best suited to your needs. Think about the services you will need not just today but farther down the road. Will you need someone familiar with compensation issues? Government compliance? International business?

CPAs act as advisors to individuals, businesses, financial institutions, nonprofit organizations, and government agencies on a wide range of financial matters. CPAs can provide help with tax preparation, building college funds, planning for retirement, and creating estate plans.

CPAs wear many hats: auditor, personal financial planner, tax advisor, management consultant, corporate financial advisor.

Ask around to identify potential CPAs in your area. Get a referral from people who are in a similar financial situation. Ask friends or business associates for recommendations. You might want to check with other professionals, such as your banker or attorney, your local chamber of commerce, or small business owners whose establishments you regularly visit.

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Questions to Ask Before Choosing a CPA

Does the individual hold an active CPA licence? To earn the CPA designation, accountants must pass a rigorous two-day professional examination and meet stringent licensing requirements. To assure that they stay current on developments in the field, the State Board of Accountancy requires all licensed CPAs to meet certain education requirements.

Is the CPA licensed to practice in your state? Call the State Board of Accountancy to confirm. Most states require CPAs to have at least a college degree or its equivalent, but several also require post-graduate work.

To what professional organizations does the CPA belong and how active is he or she in those organizations and in your community?

Are you comfortable with the CPA's personality and communication style? Keep in mind that a long-term working relationship between you and your CPA can help you take an informed, consistent approach to personal financial and business problems and may help you meet your financial goals.

Does the CPA have the expertise you need? During your interview, let the CPA know clearly the kinds of assistance you need. Then ask about his or her qualifications, profiles of typical clients, and availability to work with you.

How much should you expect to pay for the CPA's services? Be sure to talk openly about how the CPA will be compensated for his or her services. Normally, CPAs base their fees on the amount of time they spend performing services on your behalf. The services you need, the complexity of your financial situation, the experience level of the CPA, and where you live will all impact the level of fees your CPA charges.

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How to Get the Most Value from a CPA's Services

Be prepared to discuss your plans and objectives. CPAs are in the best position to advise you and serve your interests when they understand your goals.

Gather information about business or personal financial decisions under consideration so you can ask the CPA specific questions.

Clearly explain what you expect from the CPA's services.

Save yourself unnecessary fees by keeping good records and not using professional time for routine work.

Let your CPA know about your attitudes toward spending and saving, your tolerance for risk, and whether you prefer to take an aggressive or conservative approach to tax-saving strategies.

Keep your CPA informed of changes in your personal and professional life (such as marriage, divorce, the birth of a child, a new home, death of a spouse, or a career change) that may impact your tax liability and personal financial goals.