A tax accountant is a professional who can help you figure out how much you owe in federal, state, and local taxes, prepare and file your tax returns, and give you advice on anything related to your business and taxes. These men and women know so much about taxes that they could probably recite the tax code in their sleep, that’s how good they are.
What does a person who does tax work do?
A good tax accountant can help you stay out of trouble with the IRS and make sure you follow tax laws. But they also have a special set of skills that can help take some of the stress out of running a business day to day.
Here are the three main ways a tax accountant can help you and your business:
Manage Payroll and Bookkeeping
Tax accountants take care of some of the administrative tasks that business owners don’t want to do, like figuring out payroll taxes for your employees and keeping up with sales tax changes for each of your products. So, you can concentrate on growing your business and taking care of your customers.
Provide Expert Tax Guidance
Taxes are hard enough as they are, and small businesses can find them even harder. When you add in new tax laws and start to think about how business decisions will affect next year’s taxes, it can get very confusing.
The good news is that a reliable tax accountant can keep you up to date on any changes to tax laws and give you advice all year long, so you can feel confident running your business.
Help You File Your Taxes
Most small businesses have to file taxes every three months. If you’re not careful, these deadlines can come up really fast! A good tax accountant will keep you on track so you don’t miss filing deadlines.
How to Choose the Right Tax Preparer
Your business depends on finding the right tax accountant, so you want to make sure you do it right. You need someone who is familiar with the tax code and can help you understand it.
After all, it’s your business, and it’s up to you whether you make a good profit or have to go to court to fight a tax lien.
Here are some good ways to look for a tax preparer:
1. Write down the names of possible tax accountants.
You shouldn’t hire the first accountant you talk to! Try to talk to three or four possible accountants in your area before making a final choice.
You can also ask family, friends, and coworkers for referrals or check with your state or national associations to find more people to interview during your search.
2. Make sure they have the right credentials.
Check out their credentials when you look for a tax accountant online. Look for an Enrolled Agent (EA), a Certified Public Accountant (CPA), or a licensed tax attorney.
Make sure potential accountants have a Preparer Tax Identification Number (PTIN) when you talk to them for a job. Your taxes will be done by them, and the IRS needs their PTIN on your return.
3. Find out about their experience and what they do best.
Would you want a root canal from a dentist who just started doing surgeries last week? We didn’t believe that. Whether you need a dentist or help with your taxes, you want someone who knows what they are doing.
Don’t be afraid to ask tax accountants how long they’ve been doing taxes. You definitely want someone who has been in business for at least two years.
You should also ask if they have any areas of tax law that they know a lot about. For example, if you know you’re going to be audited, make sure you hire someone who has dealt with audits and the IRS before.
4. Make sure they file electronically.
If a tax preparer expects to file 11 or more tax returns in a calendar year, the IRS wants those returns to be filed electronically.1 If your preparer doesn’t e-file, it’s likely that they don’t do as much tax work as you would expect from someone who says they do taxes full-time.
5. Compare how much they cost.
Most tax accountants have different ways of charging for their services, so don’t be afraid to ask how they’ll charge you.
Some accountants might charge you more if your tax return is complicated or if your business needs a certain kind of tax service. Some may charge a flat fee for each tax form you need to file your return. No matter what, you should know what you’re paying for and why.
6. Find someone who will look out for you.
If you are audited, you will need a tax expert on your side. Enrolled Agents, CPAs, and tax lawyers with PTINs can represent you in front of the IRS if there is an audit, an appeal, or a problem with payment or collection.
You’ll also want to make sure they’re available when it’s not tax season and will answer the phone or meet with you in person if you need advice or help. The last thing you want is for someone to disappear after you send in your tax return.
What to Ask Your Accountant About Your Taxes
It’s important to make sure you ask the right questions when you’re trying to find the right tax accountant for you and your business. So, you can get a good idea of what they know and how they run their business.
Does your office do all of the work itself, or do you hire other people to do some or all of it? You want to know who you’ll be dealing with and make sure they’re speaking clearly.
When will it be done? Ask for a rough idea of how much time it will take to do your taxes. Find out where you are on the list if they have a lot of other clients.
How much do you charge? Can you write that down? Get an estimate in writing of how much it will cost to do your taxes.
Will you tell other people about me? What are their rules about privacy? If you don’t want to get a lot of marketing emails you didn’t ask for, make sure they aren’t selling your information to a marketing company. They can do that, but they should tell you why and ask your permission first.
When I pay my taxes every three months, do I pay too much, too little, or just the right amount? Here, you want to be like Goldilocks and find the right amount. If you get a big tax refund or have to pay fines at the end of the year, you should figure out how much you should pay each quarter.
Can I talk to some of the other small businesses you work with? If you want to know what’s good, bad, and ugly about a tax accountant, the best person to ask is another small business owner who has worked with that accountant.
Why you need a tax professional
At the end of the day, running a business is what you do best. You’re really good at it, and it’s something you really care about. But the government wants its share, so you have to pay your taxes. Do you have the time and energy to keep up with changes to the tax code? Do you have time to go through your receipts and figure out which business expenses can be deducted and which can’t?
Most likely not! Your main goals are to serve your customers and shake up the market. Your customers come to you because you are an expert at giving them the services they need and solving their problems. So, it makes sense to get help with your small business taxes from a professional.
Questions to Ask
You may increase the likelihood of finding someone who is knowledgeable and dependable by making sure you ask the appropriate questions. The following are some potential avenues of inquiry:
What licenses or distinctions do you have?
How long have you been working in the field of taxation?
In what areas of tax law do you have particular expertise?
Do you ever hire outside help for any of your projects, or do you and/or your employees handle everything yourself?
How much time do you anticipate it will take you to finish preparing my tax return?
How much do your services cost? Are you able to negotiate them? Is it possible to get that in writing?
Where can I see the terms of your privacy policy?
Do you think that the amount of tax that I pay is appropriate, excessive, or some combination of the three?
Every customer of an accounting firm must get in writing an explanation of the firm’s privacy practices, as this is a legal requirement. If you are not given a copy, feel free to request one.
A Few Additional Safety Measures
After the initial interview, you should follow up with a quick background check. You might also try searching for the professional’s name on social media platforms. Find out what is stated about them not only on their own website but also on the websites of others.
Get in touch with the board of accountancy in your state if you want to check the standing of a CPA’s license or learn whether or not the accountant has ever been subjected to any kind of disciplinary action.
You have the option to inquire with the Office of Professional Responsibility of the IRS on whether or not an EA has ever been reprimanded or punished in any other way. You should also consider contacting your community’s chamber of commerce for more information.
Also, remember that you are ultimately responsible for making sure that the information on your tax return is correct, not your accountant.
