I get this question a lot and as someone who is both, I wanted to shed a light on the difference between the two and how to determine whether or not you need both.
CPA
A CPA’s primary role is to evaluate the prior year and calculate your tax liability. They're taking information from your income and expenses and preparing your tax return and trying to figure out ways to save you taxes, legally, to make sure you're abiding by the law and reporting your income and expenses correctly. This is who you go to when you want to know if you can deduct something.
If you have a W-2 and are just expensing mortgage interest and property taxes, you probably don't need to pay a CPA. TurboTax is your friend.
Now, if you have granted stock options, you're a business owner, have rental property or have to pay estimated tax payments, a CPA is a good idea for you.
FINANCIAL PLANNER
A Financial Planner, on the other hand, is more forward-looking. They take into account your whole financial picture, your goals, and cash flow. They advise on investments (whereas a CPA cannot) and have an eye towards tax planning to help save you taxes here and there. They decide both which investment accounts you should have (401(k) vs. IRA), and how much insurance you need in order to create and implement a plan to meet your financial goals.
A WINNING COMBO
Where the magic happens is when your Financial Planner and CPA talk. For instance, your Financial Planner can run their forward-looking ideas by your CPA and ask, “how does this sound?” or “This is what we're thinking. Do you have any other ideas?” Or just giving the CPA a heads up so that they're on the same team to avoid more work on their part and fees.
Because of my knowledge and expertise as a CPA, many of my clients have asked me be the liaison between them and their CPA. I’m able to leverage my experience, both as a financial planner and CPA, to not only save my clients’ time, but also optimize their past and future financial situation.
Let me know if you have any questions. I’d be happy to answer them.
