Hiring a Personal Accountant?

Hi guys, Has anyone ever hired a personal accountant or financial advisor to help them set up an LLC or other legal entity to use as a tax deduction vehicle? Specifically, I am trying to figure out who to look for to help me set up an entity so that I can itemize as many deductions as possible for this coming year’s tax season, as well as to figure out how to create some sort of investment vehicle for my personal trading account so that I can pay lower capital gains taxes (if that’s even possible). I’m very early on in this process and haven’t done much research yet, so any advice or clarifications about what is and is not possible would be helpful. Thanks.

Yo Bro, let me see if I can help. I worked for a small CPA who specialized in HNW and small business owner’s income tax preparation and planning. His fees were less than a top 25 accounting firm, but more than an H&R Block. Also, since he was a sole proprietor, he had more freedom to really get to know his clients and help them beyond what could be expected at a big accounting firm. What you’re after should not be a cause for concern. I would look for CPAs in this niche within your network (linkedin would be a good start). Most CPAs are roughly one in the same, it is a saturated business. The key difference is the personal trust. Before I ramble on further, my suggestions are to find one that you trust, and one familiar with your set up. See if you can get a referral. Otherwise I’m sure Mwvt will have some input here. Also, are you able to trade freely? I recall your last post about trade concerns.

Thanks QuantJock, that’s helpful. So it sounds like a CPA would be better than a CFP? I’m not trying to start a designation flame war here, I really don’t know. I basically want to pay someone to set up the paper work, tell me which receipts to save and how to max my deductions, and then pay them again on April 15th to file for me if it’s going to be complicated (if it’s relatively easy I’ll just do it).

CPA would be better than a CFP. I do not think a CFP can render tax advice. Setting up the LLC (JDV is needed here). I’ve been told it is not hard to set up an LLC, templates are available online. Filling out most of the filing papers and then giving it to someone to review (CPA/JD) is the best cost effective way to do it. One person I know set it up herself without any trouble. Your idea should be feasible. I recall one hedge fund PM had a side asset management business back in my day. I imagine this is the set up you would like. I don’t know too much more about setting this type of thing up, but from what I understand the LLC is the way to do it with the least amount of trouble. Wish I knew more, this type of stuff excites me, someday I want to run my own show. Let me shoot off an email to my old manager since I’d like to know the answer to this. I’ll follow up once I have some relatively concrete information.

I had my own accounting firm (sole proprietorship and LLP) for over 10 years so maybe I can add a bit. Setting up a simple LLC is (ahem), simple. There are templates that should work fine for you. Do a little research and have a talk with a good CPA to make sure that the choice of entity is correct for you. QJ MBA hit most of the important points. Get some referrals and don’t be afraid to spend a few extra bucks for a good one or some extra time. It will be worth it.

Setting up an LLC is relatively easy. An attorney might charge you 2K to set it up, but you can do it yourself for ~$150. As others said there are templates for operation agreements online. Make sure it is state specific as each have their own rules (to an extent). Just so you know, the entity that you set up must be in the game for a profit. You have to show a profit at least 1 every 3-5 years (don’t remember exactly) or else you will be deemed a hobby and all your itemized deductions will be lost. In other words, you can’t set up a landscape company and buy a bunch of equipment for your personal yard every year and deduct it. As far as the capital gains, what are you looking to do? You only pay 15% on them now!

^Definitely go with an accountant. Goes to eleven’s advice is GOLD in choosing the right type of entity. Depending on the entity choice, there are different tax consequences. It also depends on what type of business you’re doing. (Are you planning to have to loan-out corp, passive income flow-through entity, or etc.?) Getting a good tax accountant that knows the tax ramnifications for the right price is extremely hard to find. I found that 90% of the tax accountants I have encountered were insufficient (meaning, they are charging too much for doing minimal work). [I essentially had to do my own research.] Out of the 10%, they are the top guns, but get ready to open your wallet. A CFP will not help you out because they are not well-versed in tax. I looked over the course material, and it has very little to do with setting up businesses, and even less on taxation. As for the showing profit or being deemed a hobby - this depends on the form you use. If you use that particular form, then you are essentially asking for an audit. This is why most self-employed businesses (small-time) use the Schedule C instead. Fortunately, I encounter many many types of businesses in my field, so I have a superficial knowledge of what goes down in the tax returns. It also helps that my firm caters to the rich, and rich people hire the best. Different entities are prone to different IRS inquiries, so… a general blanket statement can’t really be made. For example, if you’re setting up a business that can look like a hobby, your priority is to have great business records and functions - VERSUS a loan-out corporation - your priority is to have legitimate business expenses and not run personal expenses through the corp. Even within these schemas, unique items may be of interest. For example, for a construction business (or even a music business), section 179 depreciation is a little known fact, but INDISPENSIBLE! Good luck with your search, and let me know if you find a good tax accountant not charging exhorbitant amounts. (My definition of a good tax accountant might be slightly skewed, because I myself am an accountant… and I expect the tax guy to know more than me - which is surprisingly not true the majority of the time.)


Thanks guys, very helpful.

You might consider a tax attorney instead of a CPA, unless the CPA specializes in setting up legal entities. Of course we’re lawyer happy here in NJ, we even use them for buying and selling houses.

A tax attorney will not be very helpful in this case. If anything, the best combination is a business transactional lawyer that know the rules for businesses and a tax accountant. Tax lawyers can have some of the knowledge, but they specialize in tax law, not business law. If you’re fighting the IRS, then get a tax lawyer. However, a tax lawyer will not know how to do the books (which is when the tax accountant comes into play), and specific law pertaining to business law in specific states (which is what business transactional lawyers specialize in). It depends on the resources you’re willing to invest, and how much you would benefit in the end.