Prelude Interactive

No, that title doesn’t connect to anything.  I just wanted to reference the ouevre of Monty Python. But, I did hire a professional accountant for the first time this year.  You might say it was a foregone conclusion after having to redo my own taxes for three of the past four years.  Plus, in 2008 I bought a house, had 10 sources of income spread across W2s and 1099s, started a business, kept actual records for the first time, and generally had no hope whatsoever of doing taxes on my own.  I think it will end up costing me somewhere between $700 and $1000.  So, is it worth it?  I think yes.

The first way to tell is by dividing the am0unt it costs by the time it would have taken me to do them myself.  It took me a full day last year, probably, and this year I was confronting several new entire classes of forms.  So, assuming it would have taken two days, at least, and divided by the hourly rate I get from actually working, it would probably be a wash.  But then when you think about the lost opportunity cost of two full days, when I could be out getting new business, working, gardening, organizing my sock drawer, getting my second hard drive working again — that’s a whole other story — then it starts to make more sense.

The second bonus is that the accountant did a much better job than I would have.  They told me a bunch of stuff I didn’t know, explained the benefits of converting to an S-CORP, told me that even though I’d need to pay taxes on rental income, I could depreciate half the house.  They sorted out my business expenses and explained how to categorize things properly. I guarantee you either I would have screwed some of it up, or missed out on some significant deductions.

If my structure stays the same in 2009 I might try to do my own next spring, based entirely on the filings from this year.  Otherwise, in times of change, I recommend having someone else sort them out.  I found my accountant by asking a half dozen friends who seemed to be good with money (or looked old and wise) and followed up on their recommendations.  I found a guy I liked, and signed up with his small firm.