153 - My Beef with Tax Pros & Lawyers
On this episode of the podcast I share why going out and hiring someone is not your best first step and what to look for if you do hire someone.
This episode is brought to you by my FREE Tax Challenge. Taxes suck but we all have to file them. I'll walk you through the 5 steps you need to get your tax documents organized and ready to file. Sign up for this free challenge.
We get different answers from different people because everyone looks at something from a different lens - an accountant and a lawyer will give you two different answers to the same question, even though tax and law are so related.
Taxes are a function of law - tax attorneys should know the tax law. I often see bad advice from accountants and attorneys (more on that in my podcast episode "Three of the Worst Pieces of Legal Advice I Have Seen in Facebook Groups"). For example, accountants love to throw out arbitrary numbers for how much income you should have before filing for an LLC.
Between accountants, bookkeepers, and lawyers, each does not usually have a full comprehensive understanding of all business entities. This is why ideally you want to work with a lawyer and an accountant when you start your business, but that's out of budget for a lot of people when just starting out.
My other beef is that tax pros and lawyers do not educate nearly enough. Lawyers charge hourly meaning you often want to avoid sitting down for a leisurely educational lesson. Accountants make more money the quicker they can move you in, out and on to the next customer meaning they lack incentive to spend time educating you.
Think of your family member that doesn't totally understand what it is you do. Imagine you ask them to create a list of all your business expenses. They couldn't. An accountant will have a general idea, but they may not have any idea about industry-specific expenses unless they are an industry-specific bookkeeper.
You need to understand your compliance costs, how much to save for taxes and what will effect your savings rate. If you have someone who files your taxes ideally they should tell you how much to pay in quarterly taxes, but that can change based on how your business performs that month or if you file jointly with your partner and their job changes. You can't rely on your tax professional to check in on your specific circumstances regularly.
Next week on the podcast I'll be diving more into quarterly taxes and how to start saving to pay them.
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