How to  Hire a Tax Professional

Running a business is all fun and games until tax time comes around folks and you have to get your financial information in check. As your business grows, it's more important to have all your accounting ducks in a row and meet all the standards the IRS requires - which can be a daunting task if you're self-employed and not familiar with taxes.

The real trick is finding someone with the right tax preparer's credentials to make the most of your taxes - they are the tax experts after all - they know all the ins and outs, how to maximize your benefits and making sure you're following things by the book. Because trust me fam, the last thing you want is the IRS coming after you for your taxes.

What is a tax preparer or tax accountant?

Before we dive deep into the nitty gritty of how to find one, it will help for me to explain what they are. A tax accountant or tax preparer is a qualified professional or service that helps you to calculate what you owe in taxes, including federal, state, and local.

However, they also help you prepare and actually file your tax returns and give general advice on your financial and tax situation, suggestions on how to improve and what you may want to avoid or stop doing. They are the true tax gurus.

When you hire a tax preparer, you are investing in the professional tax preparation that they offer as well as the extended knowledge they have in the realm of taxes - something most of us find daunting and quite confusing.

What does a tax accountant do?

Above I explained what the overarching job description of tax pro was, but I'll get into more detail to help you fully understand why finding, and hiring, a tax professional is critical to your finances. No matter how good you think you are at doing your taxes, trust me when I tell you, tax pro, they are better - it's their job!

Payroll and bookkeeping

Nobody wants to be the one to do the dirty work of business, the side that's less glamorized, but still terribly important to running a business - the paperwork associated with managing payroll and keeping track of funds going in and out of your company.

Whether your company is a large empire or a smaller business, you have income and you have expenses.

These tax professionals will help manage and calculate payroll taxes for those of you that have employees, as well as manage sales tax changes for businesses that sell products. It's incredibly hard to focus on your customers and clients when you're also managing payroll and the backend of your business, they can help lessen that stress.

Expert tax advice

These professionals live and breathe taxes, so it's no surprise that they are going to want to share their knowledge with you and help you become financially confident.

The value of hiring a trustworthy and highly competent tax preparer is they are there to let you in on what's changed, how it may affect you, and best of all, put it into simple terms that are easily digestible - because let's be real, taxes are confusing.

However, they are also the ones that are going to be the voice of reason and tell you what NOT to be doing to save your finances or avoid the IRS from knocking on your door.

Help you actually file your taxes

Being prepared for tax season and actually filing your taxes are two different beasts - luckily, tax preparers can help you with both. Business taxes are a whole other realm of taxes, they are often filed quarterly, instead of annually like your personal taxes, meaning that the quarterly deadlines come up fast and you'll want a third-party holding you accountable and keeping you on track.

I think I've made it quite a theme that you want to do all you can to file right, on-time, and avoid the IRS coming to ask questions.

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Finding the right tax accountant

It can be tempting to rely on tax software alone to help you file your own taxes, but trust me when I say the investment in a professional organization or individual tax preparer is paramount to doing things right the first time, especially when you have a small business.

But, how do you ensure you find the right one? One that can be trusted and has the professional credentials to meet your small businesses tax needs? Let's break it down.

Make a list of the potential tax accountants in your area

Just as with most things that involve a big decision, you don't want to go with the first person you find, you want to do some research and find between two to three professionals in your area that you can talk with, compare, and ultimately make your decision from there.

And I hear you, how do you know what to look for in a professional that implies they're fully certified public accountants and you can trust them? Let's take a look at the credentials you want to look for and questions you want to ask to help you make your final decision.

The credentials

There are three big things you want to look for when scouring the internet for a tax professional - CPA or certified public accountant, licensed tax attorney, or an Enrolled Agent (EA). Let's quickly break down the difference between these three credentials. 

A CPA is the difference between someone who says they're an accountant and someone who completed the education, work, and has the experience to be certified by the Board of Accountancy.

In comparison, a licensed tax attorney can still help you file your return and provide tax advice but they are also able to represent you in the court of law, if necessary.

An Enrolled Agent can do the same, but they can only represent you in front of the IRS, not in a court of law. Knowing the difference between these three might come in handy when you're looking for a tax professional and want to cover all your bases, especially if you're a larger company with employees.

The experience and specializations

When you're talking with a potential tax preparer, you want to ask them about their experience and what they specialize in, this can vary from person to person and you want to make sure you're finding the right one for your circumstances.

The most important thing is you want someone that's experienced - you'll want to stay away from the recent grad who just started professionally doing taxes, yikes! Typically, the two year mark is ideal for someone with the right knowledge and experience to help you and do things the right way.

When finding a tax preparer for your business, it's important to understand their specializations or areas of expertise. If you are expecting state taxes to be audited, finding someone that's extremely knowledgeable in that area will be beneficial for you.

The e-filing caveat

A little secret that will help in your search is that the IRS actually requires tax preparers that file 11 or more returns in a year to file returns electronically. If they don't e-file, it's a bit of a red flag considering that means they aren't filling as many tax returns as one would expect from someone doing this professionally and full-time.

Comparing costs

You don't buy the first car you see on the lot, even if it may seem like the best, you don't want to do that with a tax preparer either. It's not taboo to ask your potential professionals what they charge for their services and what their fee structures look like, they should be prepared for this question!

Each professional will have a different fee structure and charges depending on their services - but remember that experience and specialization is important - if they've been in business for 15 years their costs are going to be higher than someone who has only been in business for 2, and that's important to keep in mind.

Knowing this information will also help you prepare financially to hire a tax preparer, when you know if they are going to charge you for the complexity of your return or they have a flat rate price for each individual tax form you'll have to file electronically. Either way, this information is incredibly helpful.

Why having a tax preparer is important

You may own a business and wear a lot of hats, but taxes shouldn't be one of them. Your specialty is running the business, let someone else handle the tax side of things.

Not only is it way less stress on you, but it also ensures that you're doing things the right way and again avoiding the IRS from knocking. Taxes are time consuming, and as a business owner there simply isn't the time to think about and look into all the intricacies that come with filing taxes.

You want someone that's going to help you and take this job off your plate. While you specialize in running your business, tax preparers specialize in filing taxes - let them do their job and help you.

Let's recap

Taxes are complex and constantly changing, as a business owner you simply don't have the time to add the "tax filer" hat to your mountain of job duties. Tax preparers are skilled, knowledgeable, and able to help you file your taxes the correct way, lessening the stress for you.

Finding the right one is the trick. You'll want to look at their credentials and make sure that they are either a CPA, tax attorney, or Enrolled Agent, in order to ensure you're covering your bases and prepared on all fronts.

However, since taxes are so complex, you'll want to make sure you're asking potential tax preparers what their experience is, how long they've been in business, if they e-file as that's a red flag if they're not, and overall what their tax specialty is.

All of this information will help you make an informed decision and ensure you're doing your taxes the right way with help from the professionals.

Let’s get to work.

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