One of the most important decisions that a small business owner can make is to choose the best possible tax preparer. Since small business owners have a lot of different things to keep track of, ranging from employees and customers to products, buildings, and more, it makes sense that they need help with certain aspects of their business, such as taxes. This is one business essential that they can outsource. The only issue comes with choosing the best tax preparer for their needs. With so many options out there, it can be hard to make that decision. Here are some tips to help.
What Types of Tax Preparers Are There?
The first thing that small business owners notice when they look for a professional tax preparer is the different types that exist. The letters after the preparer’s name or their company’s name (if they work for a larger organization) mean different things, but as long as they meet the qualifications, they can prepare taxes. Here are the options:
- Certified Public Accountant (CPA) – While some CPAs operate their own independent companies, others work for bigger organizations alongside their fellow CPAs and other professionals. Every state has their own schooling requirements and licensing tests that must be passed in order to work as a CPA. Plus, the industry is highly regulated. Once these requirements are met and licenses are obtained, a CPA can prepare tax returns, do general business-related accounting and bookkeeping, and handle other forms of accounting. CPAs are ideal for complicated business accounting and tax preparing.
- Enrolled Agent – An enrolled agent is a little different than a CPA. These agents are officially approved by the IRS and have either had at least five years of tax preparation experience working directly with the IRS or have passed a test administered by the organization. While an enrolled agent can help a small business with tax preparation, many only do this type of work and some basic accounting and bookkeeping tasks. They often do not handle the delicate and complicated accounting of a CPA.
- Tax Attorney – A tax attorney is someone who specializes in this particular area of law. While they do not do basic bookkeeping or tax preparation, they can defend small businesses in court and represent them when dealing with IRS audits, liens, and more. They can also handle estate preparations and business related planning. A tax attorney either has a specialization in this type of law that they obtained while going through law school (an LLM), or, if they learned about tax law while on the job, they have passed a special bar exam that contains complicated tax law related questions.
Choosing the right tax preparer depends on what type of assistance that a small business needs. For example, if the taxes are fairly uncomplicated and straightforward, then an enrolled agent can do the job. If things are a bit more complicated, then a CPA can provide the right level of help. And of course, if the IRS has selected the business for an audit or back taxes are owed and a lien is in progress, then the business can choose a tax attorney. Of course, some organizations have all these different tax preparer levels on staff, making it easy to find the best one for the job.
Getting Several Referrals
Understanding the different types of tax preparers is only the first step. While it helps small business owners know who does what when they are looking at listings, it doesn’t help them determine who has the most knowledge or is able to help the company owner by handling their tax preparation and other tasks. This is where referrals and reviews come into play.
- Asking for a Referral – The first thing that a small business owner can do is ask for a referral. They can reach out to people that they’ve met in and around their city, or even use social media. This is one place where having some of the right connections come in handy, because they might even know a good tax preparer who specializes in small businesses. Of course, this isn’t the only way to find a tax preparer.
- Checking Online Reviews – Online reviews can be tricky. Some can be manipulated by the company to the point that negative reviews are removed or positive ones are paid for and submitted. However, they are a good starting point and can help a small business owner vet the many names that they received when they asked for referrals. Just keep in mind that disgruntled people tend to leave more reviews than those who had a positive experience.
- Local Business Organizations – Most cities have a Chamber of Commerce that local business members can join. This organization is ideal, as any local CPAs, enrolled agents, or tax attorneys that are members end up mingling with other small business owners, making it easy to find a tax preparer. These relationships definitely help when comes to choosing the best person or organization for the job, because having that one thing in common often makes a big difference.
Once the small business owner has received the names of several tax preparers or tax preparation companies, the next step involves going through the best of those referrals and contacting them before moving forward and choosing one.
Asking for a Consultation
Once a list of local tax preparers is in hand and reviews have been checked, the next step involves asking for a consultation. There’s nothing wrong with meeting with several different tax preparers before picking the one who not only will do the best job, but who is also affordable.
Before attending the consultation, it’s important to gather as much as financial information about the business as possible, including payroll and expense documents, prior tax returns, and even financial statements and cash flow information. This will help the tax preparer not only answer your questions, but also gauge whether or not they can help you.
How Much Do They Charge?
One of the most important things to find out during the consultation is how much the tax preparer will charge for their services. While this does depend on what kind of assistance you need, as that helps them determine just how much time they will need to spend working on your business’ tax return, it also helps you see if you can afford their services. Depending on the level of assistance and the type of tax preparer that you’re meeting with, these fees can vary wildly. However, one thing tends to stay the same – an enrolled agent often charges less than a CPA who charges less than a tax attorney.
What Kind of Assistance Do You Need?
In addition, knowing what level of assistance that you need can help you make this important decision. A small business owner who does most of their own bookkeeping and just needs help at tax time might be able to just use an enrolled agent. However, someone who needs help with bookkeeping and other accounting tasks, on top of tax preparation, will benefit from working with a CPA. And of course, tax attorneys are there when business owners need legal representation.
Asking the Important Questions
On top of the other questions, there are several important ones to ask, such as those regarding how the tax preparer goes about filing tax returns and whether or not they will fully support the small business owner and have their back after the tax return has been submitted.
- What About E-Filing? – Some tax preparers prefer to e-file their client’s returns, while other still do things on paper. While both options will work, it does come down to how quickly the IRS ends up processing the return, as well as the amount of additional work involved in filling out the paperwork. If you have one preference over another, the consultation is the time to find out whether or not the tax preparer agrees with you.
- Will They Support You During an Audit? – Once the tax return is completed and submitted, will the tax preparer have your back? If your small business is selected for an audit, will they help you gather all of the required information and represent you in front of the IRS? It’s important to choose a tax preparer who can help with all of this and more. An organization or individual who calls the job done once the return is submitted may not be willing to help should the IRS contact you, making them possibly the wrong people for the job.
Contact Us Today
If you are a small business owner who needs help with their taxes, then reach out to the tax advisors at Enterprise Consultants Group. No matter the size of your business, we can help. We can answer your questions, discuss your rights, and provide actionable options. Please contact us online or at (800) 575-9284 today to schedule a free and confidential consultation to see how we can help you.
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