Hiring a tax professional is an integral part of any business. A tax professional will help you in making fundamental tax decisions, including interpreting tax laws and regulations, resolving tax issues, and ensuring that you are not paying unnecessary taxes.
Picking the right tax professional can be the difference between keeping more of your hard-earned money or being audited by the IRS. Large companies can afford to pay for the best tax advice. What about small businesses and startups? Here are some tips to help you find the right tax professional for you.
Choosing the Right Tax Professional
There are four main types of tax professionals that can assist your business.
Non-Credentialed Tax Preparers
These tax pros help with preparing tax returns. They usually work for national tax preparation services and generally are one of the more inexpensive options. They handle simple individual tax returns.
For your business tax returns, you shouldn’t consider hiring a non-credentialed tax preparer unless you are on a very tight budget. It is also worth noting that the IRS does not accredit them, and hence they may not represent your business on tax matters.
Enrolled Agents
Enrolled agents are tax advisers and preparers. Unlike the non-credentialed preparers, enrolled agents are licensed by the IRS after passing a rigorous tax exam.
Their specialty is on taxes, and they can represent you and your business before the IRS at all levels, including exam, collection, and audit processes. They can help with filing a tax appeal but they cannot represent you in tax court.
Tax Attorneys
Tax attorneys are lawyers whose specialty is tax and tax-related matters. A proper tax attorney holds a special tax degree or certification from a state bar association. Their rates vary and are similar to what other types of attorney charges.
In addition to representing your business at all levels of the IRS, they can represent you in a tax court. They are best suited to handling complex tax matters or IRS disputes. It’s also important to engage a tax attorney when starting a new business as they will advise on tax ramifications.
Certified Public Accountants
CPAs are licensed accountants and regulated by the state. They are considered to be highly qualified professionals that need to hold a college degree, have experience, and pass a rigorous exam. Top CPAs, especially those that specialize in business taxes can be among the most expensive tax professionals.
A CPA can perform sophisticated accounting and tax work in addition to preparing tax returns. If you need a highly knowledgeable tax professional for routine tasks, then you can hire a CPA in-house or on a part-time basis.
Now that you know the array of tax professionals to hire from based on your tax needs, the next step is to know what role the tax pro should play in your business.
What to Expect from a Tax Professional
- Help make critical financial decisions. Your tax pro should be in a position to advise you accordingly and help you in making fundamental business decisions based on information relevant to your business. For example, the tax pro should help you with deciding how much taxes to pay and how much to withhold.
- Help with keeping tax records. Record keeping is a strenuous and equally demanding task. A tax professional should come in handy with bookkeeping and organizing your tax records.
- Help with preparing tax forms. Most startup owners often try to prepare tax forms on their own, but it’s advisable to let a pro do this. They can pick out errors that you could not have seen. They can help raise the alarm on areas that could put you into trouble with the tax laws.
Finding and Hiring the Right Tax Professional
Hiring a tax professional shouldn’t be different from hiring an employee. The right one can help your business grow, while the wrong one can stymie your company’s growth. Here are some tips to help you find the right one for your business.
- Interview and test the tax pro’s knowledge. Asking relevant questions related to your tax needs will help you gain confidence in the tax professional you are about to hire. Unless a national firm, stick to tax professionals within your state as they may be more knowledgeable about the rules and regulations governing business and may offer further advice.
- Ask for references. Talk to their clients to see how the tax professional has performed. Look for references that are similar to your firm. Each industry and business sectors have different laws and you want one experienced in yours.
- Negotiate fees. You will need to discuss payments with the tax pro you are about to hire. It is necessary to agree on payments from the onset, as the tax work might turn out more time-consuming later on. The agreement will help in avoiding further charges that may impact your business negatively.
Final Word
Choosing the right tax pro to handle tax matters is fundamental to your business. It will save you time and you will avoid costly tax mistakes that could bring down your business!