By Natasha Snow
Faculty Member, Accounting at American Public University
There is an old adage: “a business needs an accountant when the economy is bad to count the money and a business needs an accountant when the economy is good to count the money.” Accountants help business owners and people to make good financial decisions in a wide range of situations.
Buying a Home
For many of us the recent housing crisis was a history lesson we lived through. Part of the reason the housing crisis was so bad was because the Community Reinvestment Act required lenders to lower the standard for home owners to obtain a loan. Advice from an accountant could have helped many consumers to evaluate their financial position before accepting a loan offer.
At any income level, the potential homeowner can use an accountant to analyze the ability to purchase a home. An accountant can look at the total financial burden, including the purchase price of the house, maintenance costs, and the risk of the home’s value to fall below the mortgage loan amount. An accountant can help to assess the income you have available to go toward paying for the home and what may be leftover to cover other living costs.
Owning a Business
Small business owners provide a needed skill, expertise, or service. However, they often lack the knowledge to be competent in making accounting decisions and completing tax forms. Local accounting organizations can be a tremendous resource.
Sam Walton, founder of WalMart, is a great example of an entrepreneur who benefited from the advice of his accountants. He gave his children equal shares at the start of the business rather than waiting until his death. By giving the shares of stock when their value was low, Walton was able to decrease his estate value, thus decreasing the overall tax liability when he died.
A certified public accountant (CPA) knows the strategies to minimize your tax liability. Also, by using a CPA, you have a professional that can represent you if you are audited by the IRS.
If you do a cost benefit analysis of an accountant you should find the benefit of hiring an accountant will always outweigh the cost. As just one benefit, making sound financial decisions will help you in the long-run by improving your credit score. Accountants know the questions to ask and the options available and can help individuals and businesses alike to make the best financial decisions.
About the Author
Natasha Snow has been an accounting professor at American Public University for two years. Originally from Russia, she has a graduate degree in accounting and a law degree.