As a young professional, you likely feel mounting pressure to handle your finances appropriately. With student loans, rising inflation and housing markets becoming more expensive, you must spend and save money wisely.
Unless you studied accounting, business or another related field in college, managing your money might seem complicated or intimidating. Starting your career and earning a decent paycheck is definitely exciting. Still, you feel like maintaining a good financial standing is like climbing an uphill mountain.
Although businesses are legally required to keep financial records, individuals are not. However, failing to track your finances can have costly consequences from an economic and tax standpoint. If someone needs assistance with their financial situation, they might hire a personal accountant.
Learn more about personal accountants, the benefits and drawbacks of hiring one and whether or not you should hire an accountant to help with your personal finances.
The Role of a Personal Accountant
Individuals often hire a personal accountant to help with tax preparation, filing and other critical aspects of financial planning. A personal accountant will usually charge an hourly fee based on the services they provide to you.
Accounting fees can vary depending on your state, the complexity of your financial situation and any legal considerations or requirements. For example, the Biden administration announced its 2023 fiscal year budget, which includes a slew of proposed tax changes that might confuse you.
For example, a personal accountant typically offers these services:
- Prepare tax returns
- Check the accuracy of your bank and credit card statements
- Assistance with paying bills
The average person might not have time to review their accounts, ensure their statements are accurate or fill out a W2 form. If you relate to this, it’s understandable that you might want to consider hiring a personal accountant.
Benefits and Drawbacks of Hiring a Personal Accountant
Let’s look at some of the benefits and drawbacks of hiring a personal accountant below.
Here are some possible benefits of hiring an accountant:
- Maintain a good credit score
- Take advantage of various tax benefits or write-offs
- Helps you invest and save your money
- Allows you to save time doing taxes
- Receive advice for next year’s tax season
- Assistance with balancing your checkbook
- Better manage your spending
- Fewer errors on important documents
- Follow legal requirements
Here are some potential drawbacks that you may run into:
- Accountants charge fees
- Human error is still a possibility
- Finding a trustworthy accountant may be challenging
- Scammers could steal your financial information
As you can see, the benefits of hiring an accountant outweigh the drawbacks. However, a tight budget alone could limit your ability to afford a personal accountant.
Depending on the type of accountant you hire, whether a bookkeeper, certified public accountant (CPA), accountant, tax preparer or tax advisor, their fees might be expensive. The last thing you want is to overspend your hard-earned money on an accountant, even if they help you with managing your finances.
Basic DIY Accounting Tips for Young Professionals
Suppose you feel comfortable managing your personal finances. In that case, there are some steps you can take to make it easier on yourself. Here are some DIY accounting tips to help get you started:
- Use a cloud-based, user-friendly personal finance software, such as Mint.com, Quicken or EveryDollar.
- Start saving for retirement by opening a Roth IRA or signing up for your employer’s 401(k).
- Build an emergency fund as a cushion if things go awry.
- Automate your savings.
- Plan your budget using FinTech.
- Pay off high-interest debt first.
- Consider investing in stocks to account for future stock-market downturns.
Hiring an accountant can make personal finance management a breeze. Still, it’s important to decide if you can afford paying for one before setting up your first meeting.
The Final Verdict: Should You Hire an Accountant?
Ultimately, you know your financial situation better than anyone else. However, consulting an accountant could help you with certain tasks, like filing your taxes or planning for retirement.
There are benefits and drawbacks to hiring an accountant, as mentioned above. Take a look at your finances, outline some goals you want to achieve and decide if hiring an accountant will help you manage your finances appropriately.