It’s critical to hire the correct tax advisor for your small business. Getting competent tax advice can save you money in the long run. You should try to establish a long-term relationship with a tax professional so that you have someone to call all year.
Take the time to learn about the many sorts of tax professionals, how they can help, and how to choose one because this independent contractor is so vital to your business’ bottom line — and will help you relax throughout the year.
Tax Advisers’ Different Types
Anyone can profess to be an expert in the field of taxation. In addition, tax return preparers do not need to be IRS-licensed. Ensure that your tax preparer is a member of the following organizations:
- Enrolled agent (EA). The IRS requires an EA to be licensed. The EA has either passed a tough test or has worked for the IRS for at least five years. Enrolled agents are the least priced tax professionals, and they frequently provide bookkeeping and accounting services.
- Certified public accountant (CPA) and other accountants. They prepare tax returns and handle advanced accounting and business-related tax tasks. CPAs are frequently required by larger businesses or businesses with complex tax returns. The larger accounting firms are more costly. Smaller CPA firms are less expensive and may be more suitable for the average small business.
- Tax attorney. Tax attorneys have a special tax law degree (called an L.L.M. in taxation) or a state bar association tax specialized certification. Tax attorneys are not cheap. However, if you have a tax problem, are in problems with the IRS, require legal representation in court, or require business and estate planning, you should consult one.
Whatever type of professional your company requires, ensure that he or she has specific experience and skills in assisting small firms. It’s even better if you can discover someone who knows a lot about your industry or sort of business.
Choosing the Right Tax Preparation Services for Your Company
To choose a reputable tax professional, follow these steps:
Obtain a list of tax professionals. Some useful places to look for tax professionals are:
- Personal recommendations. Inquire among your friends, family, and coworkers.
- Advertising. Look through trade magazines, directories, phone books, and newspapers for ideas.
- Referral panels and professional associations. Local bar groups and CPA societies are good places to start. Alternatively, go to www.cpadirectory.com to find a CPA. You can find an EA through the National Association of Enrolled Agents (www.naea.org). A referral from one of these agencies or organizations should not be interpreted as a recommendation or certification of competency.
Candidates should be interviewed. At least three people or businesses should be interviewed. Find out if the tax professional has the time to assist you on a regular basis and if he has the experience your company requires.
Test the tax pro’s know-how. Ask questions to assess the tax professional’s attitude toward the IRS and knowledge of small business tax concerns (from self-help books or online legal material). Check to see if she has ever represented clients in front of the IRS, especially during IRS audits.
Ask yourself questions. As you go through the selection process, consider whether the tax professional inspires confidence, is educated, and appears capable of representing you in front of the IRS. Finally, consider whether you’d be comfortable working with a tax professional.
Take your time. Don’t rush through the procedure. The optimum time to look is during the summer or fall, rather than during the tax season, which runs from January through May.
Make sure you’re aware of the charges and fees associated with hiring a tax professional up front. Some charge a set fee for services including bookkeeping, accounting, and tax preparation. Others bill on an hourly basis.
You might be able to haggle over the costs. You might obtain a discount if you catch the tax pro at a sluggish time or if he or she believes you’ll be a long-term client. In any case, seek a written fee agreement once you and the tax pro have agreed on the rates. This will come in handy if you ever have a problem with a tax bill.
How Can Tax Professionals Assist Your Company?
If you locate a good tax advisor, you will seek his or her help in a variety of ways throughout the year.
Information and suggestions. Your tax advisor should be able to assist you in making important tax decisions and give you basic information and guidance.
Keeping track of things. If you despise keeping records, have your tax professional set up a system that is specific to your firm. One way of doing that is also pay stubs. A pay stub contains information such as how much was paid in taxes on your behalf, how much was deducted for benefits, and the total amount received to you after taxes and deductions.
Preparation of tax forms. Most businesses can benefit from having their tax forms prepared by a professional. If you do it yourself, at the very least get your documentation reviewed by a tax professional. The tax professional can point out tax deductions that you or your software may have overlooked, as well as red flags that could lead to trouble.