Most of us in personal finance could probably manage filing our own taxes. The software that’s available makes the process relatively painless. But just because you can, does that mean you should?
I just finished meeting with my accountant to discuss my 2016 taxes. So much fun.
There was a time when I handled all my tax filings myself. And there’s something to be said for that. Just like when you’re managing your own money, I’ve found you make better decisions when you file your own taxes.
The problem with handling taxes yourself is staying on top of everything. If you have a regular job that pays a salary and there’s nothing else too complicated, then it’s fine to do it yourself. But if you have a business, or employees (i.e., a nanny), or an ownership interest in a partnership, then things can get a little more complicated.
In New Mexico, if you own a business, you need to file and pay gross receipts tax every quarter. Gross receipts tax is essentially a sales tax on services. This is in addition to keeping your business license current, paying state and federal income taxes, as well as paying various employment related taxes for you and your employees. But do you know if you’re required to pay gross receipts tax for services provided to out-of-state clients? How about if you’re doing the work out-of-state?
That’s why you hire an accountant who knows these things. You can spend all your time keeping up with these requirements or you can hire someone to do it for you while you focus on growing your business and servicing your clients.
Another hidden benefit to hiring an accountant is that many times, your accountant is well-connected in the community. They may know about rental properties going up for sale or other clients that need to do a real estate exchange. I actually think the fee you’ll pay your accountant is well-spent when you start factoring in those intangibles.
Either way, after working for the past five hours on this, I’m ready to move on to something more fun.
Readers, do you file your own taxes or do you use an outside third-party? I would love to hear more about your thought process either way.
Still doing my taxes myself with Taxcut since they’re still simple.
Looking forward to when my assets and cash flows are complex enough to require an expert. As you point out, accountants and lawyers are great connections into the broader local business community.
In addition to an accountant and a lawyer, another good connection to the business community is a banker.
Thanks, Jack.
Agreed – my wife and mother are accountants and we still use an outside accountant. The cost is reasonable and the advice we get from them has saved us more money than we’ve paid via advice in business structure, timing of various investments, and advice based on what has worked vs. not worked for other clients much wealthier than us. – Bryan
Sounds like we’re on the same page.
Thanks for stopping by and commenting.