How a Personal Accountant Can Help You With Your Tax Prep
Looking toward tax season and feeling overwhelmed? You're not alone. Many people turn to professional accountants to help take care of their taxes. With complex write-offs and deductions that change every year, it can get pretty messy and confusing.
Hiring a personal accountant to file your taxes for you can be a lifesaver, in regard to time and money.
You need to be careful about who you hire, as you are liable for any mistakes the accountant makes. This means if you get audited, it won't be the accountant who is in trouble with the IRS, but your company. Some may be able to represent you in front of the IRS if there is a problem, which is a quality to look out for.
You can avoid that fate, however, by hiring a professional CPA with a lot of experience handling taxes for a company like yours.
Keep reading for an in-depth look at how a personal accountant can help you file your taxes.
They Can Help You Deduct Things You Might Have Even Thought Of
You may know that there are tips and tricks for business owners when it comes to saving money on taxes, but there are probably write-offs and deductions you've never even considered.
Even though you'll have to invest some money for a CPA to do your taxes, you'll likely save even more in the long run by getting the proper deductions and write-offs. This gives you more capital for your business to allow it to continue to grow.
A Personal Accountant Can Make Sure Your Returns are Error-Free
Making a mistake on your taxes could cost you or your business a lot of money. In some cases, this may not be money you even have. Hiring a personal accountant can ensure that you meet all of the requirements for the IRS.
Some accountants are able to represent you in front of the IRS if there is an audit. But a good one will turn in your return with ease and you won't ever have to worry that you might be in a lengthy dispute with the IRS.
They're Better Than Software
People are increasingly turning to computer software programs to do their taxes. This is due to the relative ease, price, and convenience. For personal tax purposes, this may be sufficient, but for a small business, you're likely to overlook many important things.
A business tax return is always much more complicated than your personal return. A software is just that, a software that isn't run by humans. As such, they ask everyone the same questions, but they may not be asking the correct questions that help your business.
They also may offer some audit protection, but they can't represent you the way an accountant can.
They Can Help Your Plan Your Taxes
A good account not only does your taxes for you but helps you prepare. They should also act as an advisor so that they can help you make the best decisions in regard to your personal business.
Knowing where and how to save money going into the new tax year means that you can create a better fiscal plan.
A Personal Accountant Can Help You If You Get Audited
Hiring an accountant is key to helping you ensure you don't get into hot water with the IRS. It is one institution you don't want to be on the wrong side of, and an audit generally is expensive and time-consuming.
If you get audited from a tax return your accountant filed, your accountant can represent you in front of the IRS. This means you have a professional on your side, and you won't be left floundering, trying to justify where you went wrong.
Not all tax preparers have the ability to do this, so it is important you understand the different types of people who can help you with your taxes.
They Know Your Situation
Most people stick with the same accountant once they find one they like. This means your accountant will be somewhat familiar with your situation before they start in on your taxes. They will already know how old your business is and information about your capital unless something big has changed.
As a result, they will know how to best take care of each situation to ensure the best outcome for you and your business.
Who Should I Hire to Do My Taxes?
Many people hear of their accountants through friends or other businesses who have done them previously. That might work for you, but what do you do if you're in a brand new place and have no idea who to turn to?
There is no board or certification that regulates all tax preparers, which can make things a little overwhelming.
Fortunately, the IRS makes it easier for you by providing the IRS' Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to help you select the right individual for your company. The directory also helps you confirm the person's qualifications, so you know if the person you hired is legitimate.
Hiring a CPA, or Certified Professional Accountant is your best bet. Not only can they prepare your taxes, find the best write-offs and deductions and generally help you feel more confident during tax season, but they can represent you before the IRS should have an audit. This is incredibly helpful, as not all accountants hold the credentials to do so.
Other professionals include Enrolled Agents, who are licensed by the IRS and are able to represent you before them should a problem arise. They often focus only on a specific tax category, such as personal or business, to ensure that they are right for your business before continuing. Because they don't hold as many credentials as a CPA (Certified Professional Accountant), they are usually cheaper to use.
You can also hire a tax attorney to help with your business, but as they garner very high fees, this would likely not be your first port of call. A tax attorney can help you with a variety of problems, like tax disputes or planning. However, for the run-of-the-mill business owner, they aren't recommended.
Lastly, there is a category of volunteers known as the Annual Filing Season Program Participants. They complete 18 hours of continuing education every year in order to help people prepare for taxes. But, they are not able to represent you if there is a dispute with the IRS regarding your taxes.
It is best to go with Enrolled Agents or CPAs as a general rule. However, if you go with an Annual Filing Season Participant who has a lot of expertise in your background, that may also work well.
Questions to Ask Your Accountant
Before you select an accountant or tax preparer, it is important to check their credentials against the IRS database.
You should always ask for their PTIN (The Preparer Tax Identification Number) as well as their license. CPAs and Enrolled Agents must participate in continuing education to keep their licenses current. You don't want to hire someone who has let their license lapse.
Ask if they can represent you before the IRS. This is very important, as not every accountant has the ability to do so. The person must hold a CPA or be an Enrolled Agent.
Hiring someone who cannot represent you before the IRS is generally a risky move, and is not recommended.
During the process of deciding if the accountant in question is right for you, you should be aware if they have worked with businesses similar to yours in the past. Ask about some of their clients and whether or not they are familiar with your industry.
You can also ask for recommendations from other businesses who have used the accountant in the past.
What Documents Do I Bring To My Accountant?
What you bring to your accountant will depend on your line of work and the nature of your business. They will be able to tell you what they need in order to file successfully.
However, you should be mindful of the documents needed in order to do taxes so that you can collect them over the course of the fiscal year.
These include wage slips, previous tax returns for your company (if applicable), any real estate documents for your company, and proof of expenses. Any expense your company plans to write off must be there in black and white, so make sure you and your employees are religious about saving them during the year.
Should I Hire a Personal Accountant for My Business?
While, ultimately, it is up to you, the advantages are plentiful and the pitfalls are few. Although it may be expensive to hire a personal accountant, it's a good investment of your company's capital. This way, you know your taxes were filed correctly the first time.
For more information on all things taxes, check out our blog.