Businesses are required by law to keep financial records and books but individuals are not. The problem is that when you do not keep records and books you can be faced with a really costly mistake. Credit card statements and bank statements can be wrong. Discovering this normally happens way too late for corrections to be made when a tight grasp on personal finances is not in place.
The big question that appears is whether or not you have to hire a professional. According to accountants at Schell & Associates, you actually have 3 options to take into account.
Using The Expert
When there is no time available or you think that your time is better spent doing something else, professional help is an option to consider. The problem in this case is that the term “personal accountant” is used way too loosely. You have to hire the right professional based on needs:
- Accountant – This professional has official accounting training and is more than capable of handling bookkeeping chores. Hourly rates will be higher than with bookkeepers or certified personal accountants.
- Bookkeeper – This is basically a concierge service for personal finances. He can pay your bills, look at CC statements and balance checkbooks, among many other things.
- CPA – Such an accountant is certified by the AICPA and hourly fees are the highest, even going as high as $50 per hour.
Doing It Yourself
Nowadays, you can use software and various cloud technology options in order to keep financial records. Mind and Quicken are just two of the options that are now available. You have to look for such options in the event you do not need professional advice and all you really have to do is to keep records. You should only consider this if you have at least basic accounting knowledge though. If you do not understand the terms in the software you will not really do a great job.
Combining The Two Options
An interesting option is to start with bookkeepers in order to set up personal accounting. You want to find someone that is knowledgeable with the programs you will utilize. These specialists are more than capable of setting up your accounts and you then put information in them. This is going to drastically simplify your tax return preparation. At the same time, the bookkeepers can look over your books from time to time to make sure everything is properly filed. You can also use an accountant for this but the hourly costs will be much higher and you should think about this option only when you need some real help.
Think about your current situation in order to figure out what the best option is in your case. The combined opportunity is definitely the one that you want to seriously take into account though. This is because it is easy to make mistakes if you are not a trained bookkeeper or accountant. Most people do not know anything about personal finances and accounting so there is absolutely no shame in that.