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Accountant and Financial Advisor: Why your business needs both

When it comes to financial planning for your business, there are a lot of options out there. An Accountant and Financial Advisor are both critical players in helping your business create a strong financial future. Both have their own unique benefits, and working with a team of advisors can help your organization create a big picture view of financial planning, budgeting, tax planning, and beyond.

We’re comparing the advantages of having each type of professional to advise you, how to know when it’s time to bring them on board, and ways they can help you grow your business!

Accountant Vs. Financial Advisor: An Overview

The role of an accountant is to help you stay compliant with accounting and financial regulations, as well as provide tax advice. An accountant can also help you create a budget, track expenses, and forecast future growth. At SME, our CPAs look at ways to structure your business or personal affairs to have the most tax-advantaged plan.

A Financial Planner’s role is to help you save for retirement, reduce your taxes, manage debt, and grow your wealth. They are looking at your big picture to help you achieve your financial goals through creating financial investment plans that build wealth over your lifetime and protect it against volatility and fluctuations.

Your Accountant Can:

  • Help you stay compliant with accounting and financial regulations
  • Provide tax advice and preparation services
  • Help to forecast future growth
  • Prepare financial statements
  • Assess depreciation
  • Create a breakdown of expenses
  • Recommend changes to business structure
  • Help develop business growth and succession strategies (as it relates to taxes)
  • Provide representation in the event of an audit

Your Financial Planner Can:

  • Prepare budgets
  • Advise you on Investing (both short and long-term)
  • Assist with asset allocation across various portfolios
  • Assist with Estate planning to handle distribution of your wealth later in life
  • Assist with Insurance planning (disability, life, etc.)
  • Advise on wealth accumulation and protection

When should I hire an accountant?

If you are a small business owner, you’ll want to have an accountant on your team. From day one, it’s important to understand how different business structures and growth plans impact your tax liability. Whether you’re in need of annual tax planning or ongoing support from a CPA, our team of accounting professionals is here to support your business growth, help you stay compliant, and plan for the strong, financial future of your business.

When should I hire a Financial Planner?

If you have specific financial goals that you want to achieve in your business, it’s probably time to bring on a Financial Planner. Whether it’s establishing and managing insurance, reducing your taxes, or growing your wealth, a Financial Planner can help develop a plan tailored specifically to you and implement it over time.

Understanding Fiduciary Responsibility

When working with an accountant and financial advisor, it’s important to understand their fiduciary responsibility. A fiduciary is a legal term meaning someone who owes a duty of trust and confidence to another person. In the accounting and financial planning world, a fiduciary must act in a way that benefits our clients.

The Fiduciary duties include care, confidentiality, loyalty, obedience, and accounting. These duties are mandated by state law. The consequences of a breach of duty can range from reputation damage to loss of license and monetary penalties.

SME Gives Comprehensive Financial Management for Your Business

Working with an accountant and financial planner as part of your financial team provides a number of advantages for your business. At SME, we offer a full suite of accounting and tax services as well as financial planning. This allows us to provide you with comprehensive financial management and advice that takes into account all aspects of your business finances – from taxation to budgeting and investment advice.

Having a coordinated advisory team can benefit your business. Here are 4 of the ways our team approach to accounting helps you.

4 benefits of having a coordinated advisory team:

Tax Impact of Investments

When building your investment portfolio, there are several important tax issues to consider, including Alternative Minimum Tax (AMT), and Social Security Tax.

If you are paying AMT, interest from normally tax-exempt private activity bonds could be taxed at a high rate. Likewise, investment income can impact the taxation of your social security benefits. By weighing the tax ramifications of potential investments, you can minimize your tax liability.

Estate Planning

Many financial planners incorporate life insurance into their clients’ financial portfolios as a tool for estate planning, however, those who work with a CPA to forecast estate taxes can also create strategies to minimize tax liability.

Real Estate Decisions

When contemplating a real estate purchase or rental, there are several tax implications to consider. Taxable income generated within your investment portfolio can be leveraged, along with deductions such as mortgage interest and real estate taxes, to support your real estate decisions.

Required Minimum Distributions

For anyone with an IRA, SIMPLE IRA, SEP or 401(k), the IRS generally requires you to start taking required minimum distributions (RMDs) annually at age 70 ½. Your accountant and financial advisor can help you strategically determine when to start taking RMDs based on your expected income in order to minimize tax impact.v

To find out more about how our team can help you optimize your business finances, contact us today!

Investment advisory services are offered through Avantax Planning PartnersSM. Commission-based securities products are offered through Avantax Investment ServicesSM, Member FINRA, SIPC. Insurance services offered through licensed agents of Avantax Planning Partners. 3200 Olympus Blvd., Suite 100, Dallas, TX 75019. The Avantax entities are independent of and unrelated to SME CPAs.  Although Avantax does not provide or supervise tax or accounting services, our Financial Professionals may offer these services through their independent outside business. Not all Financial Professionals are licensed to offer all products or services. Financial planning and investment advisory services require separate licenses. 

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