Investing in a Venture? 5 Reasons to Hire an Accountant

Do you want to invest in a local business, either established or new? Are you an investor with hard assets, such as art, wine, or cars? If so, you may want to hire your own accountant as soon as possible. Why? Here are a few important reasons to work with your own CPA no matter what type of investment you want to get into.

1. To Vet the Business or Venture
Before you invest in any new project, you should perform a diligent check on its potential. If you are becoming a silent or limited partner, for instance, you may need to analyze the business's current activities, profits and losses, cash flow, leverage, and structure. If the venture is new, the business plan needs to be analyzed and the numbers need to be double-checked for accuracy.

While you can do some of this research, your accountant will better crunch the numbers. With their experience analyzing many other small businesses and investments, they can offer impartial and reliable guidance.

2. To Handle Your Own Taxes
Investors usually see their own income taxes become more complex. Your income may be reported through various new forms, including a Schedule K-1, various forms of a 1099 form, and Schedules B and D. Some income or expenses may not even be reported by others and must instead be tracked and declared independently. Your investment income may cross state or international borders. And it may be taxed at different rates.

Even if you have done your own income taxes in the past, this new complexity usually calls for the help of an accountant, especially in the early years. You may be able to learn the ropes over time, but the best way to do this is with a pro to help you.

3. To Work With Your Financial Planner
Do you have a financial plan? As your income and assets grow, a financial planner is a valuable tool to ensure a stable future. But while they have training in many aspects of your financial life, they aren't usually accountants. You may need a skilled accountant to work with your planner in areas like tax planning and strategies, how your investment might affect income in retirement, and business entity choice.

4. To Understand Your Profit
Are you making money from your investment? The answer is often tricky. Even a simple investment in a hard asset like an antique car can be complicated. Your profit isn't just the sales price minus the purchase price. You may also have to factor in things like depreciation, taxes, repairs, maintenance expenses, overhead, and the opportunity cost in time and money.

Certainly, if your profit from either a business or collecting investment isn't as much as you want it to be, you should have an accountant analyze the venture before deciding what to do next. You may be able to trim expenses or taxes and make it a profitable investment. Or the business you bought into may have little chance of turning a profit in the foreseeable future.

5. To Keep You Organized
Most Americans think of accountants as something only a business uses. But a personal accountant can manage your finances and keep you on track. They might pay your bills, track income, move money between accounts, retain records as legally required, organize documentation, pay quarterly taxes, and make retirement contributions for you.

Investors with multiple sources of income, lots of paperwork, and a busy schedule do well to use outside services. Look at this in the same way a business would look at hiring an accountant to ensure it functions well and earns a profit.

Where to Start
Could you use the help of an accountant as you prepare to become a serious investor? Then start by calling on the team at Williams & Associates Tax Services. We will work with you to provide the assistance you need so you can focus on turning your investment into a profit.