When most business hear the word – accounting – they get a little bit nervous. And the younger entrepreneur is, the more nervous he gets.
According to research from small business mentoring organization SCORE, around 40% of small business owners say that accounting, bookkeeping and taxes are the worst parts of owning and operating a business.
The research has also revealed that an average business owner in the United States spends more than 40 hours each year on tax preparation. And that’s just the average. While some people don’t have such a disdain for taxes, others spend over 80 hours a year on preparation.
Do You Need Help With Tax Preparation?
It’s not so hard to understand why so many people dislike the whole process – with all of those changing laws, endless series of forms and easy-to-miss tax deductions a person can easily get confused.
So if you feel like you need some help with your tax preparation – you’re definitely not alone – as Time Money reports, according to IRS research, nearly 50% of tax payers in the United States hire a professional to help them deal with taxes every year.
And you’re not a simple tax payer, after all, you’re a business owner and your situation is naturally more intense. Poor bookkeeping could easily set your company back in the short term… and in the long haul, it can really come back and bite you…
Why You Need to Choose Carefully…
Since this is such a sensitive issue, you have to be careful when picking a tax professional. At the end of the day, you’re legally responsible for any information on your tax return, no matter who you paid to help you fill the forms out.
And keep in mind, this will be the person who’ll have your most personal information in his hands – including, but not limited to your income, social security number and even your children’s’ names – basically every part of your financial life.
Although there are thousands of honest professionals out there, the government receives tens and even hundreds of thousands of reports of taxpayer fraud each year, according to a recent report from the National Consumer Law Center.
With all of that in mind, you see just how careful you have to be when picking a tax professional. So in order to help you escape the ire of the IRS and ensure the success of your business for years, here are a couple of things you need to know when looking for a tax professional…
Where to Find a Professional?
The best way to find a professional who will handle your taxes is to talk to a person you trust and ask for recommendations. But if no one from your inner circle can’t help you, you’ll of course need to look for other resources. And as you expected you should consult Google on the matter…
The first place you should look is Angie’s List, however, we have to warn you that the site requires a membership fee. But for a small – one-time fee if you manage to find a professional quickly – you’ll have access to a number of reviews of local financial professionals.
The American Institute of Certified Public Accountants has a huge list of CPAs who also double as designated financial specialists, who will be able to offer their knowledge of financial planning along with tax expertise.
· The NAEA
And if the two sites don’t help you, you also have the National Association of Enrolled Agents’ official website, where you can look for an enrolled agent. You have a number of filters on the site, which allow you to filter your searches by specialty and make your search as easy as possible.
Of course, these aren’t the only sites that will ease your search, you have a number of other resources out there and even sites like Yelp have directory listings of tax professionals. Nonetheless, once you pick two or three candidates, you need to start asking some questions in order to ensure that person will do a good job and not scam you…
What to Ask Before You Hire Someone
· Professional Requirements
For starters, you should check if the person has a Preparer Tax Identification Number – which the government requires all paid preparers to have. Furthermore, you should check what organizations he belongs to, what level of education he has, how long he’s been doing returns. If you’re dealing with a younger person who doesn’t have too much experience, you should check of he or she at least had experience with accounting internships…
· Performing Background Checks
Just browse around for five minutes, and you’ll find a number of different cases where returners altered clients’ returns without their knowledge, in order to illegally get tax refunds. You need to watch out for these criminals, so before you hire anyone, you should check their background. For instance, you can check any company’s background through the Better Business Bureau or you could check the boards of accountancy in your state and look for any licensing issues or disciplinary actions for a tax professional.
· Asking About the Fees
The average cost of hiring a professional tax preparer is exactly $273, according to statistics provided by the National Society of Accountants. So you should call the people you selected and ask about the fees, and they should be able to explain the basis of their fee structure, meaning if they charge hourly, monthly, etc. and just be warned: less reputable and fraudulent professionals may base their fees on a percentage of your tax returns.
Final Thoughts: Reviewing the Returns
As we keep mentioning, you and only you are responsible for the information on your tax return, so you should make sure to carefully look through the paperwork before you put your name on it. And keep in mind that paid tax preparers are required sign the returns they have worked on and include their PTIN on them by law.
Also, make sure to get a hold of the copy of your tax returns, and ensure that you have a way of contacting your tax preparer after the filling deadline, just in case something unexpected happens.
Finally, if something is not completely clear, you shouldn’t be afraid to ask your preparer a number of questions. And if you’re preparer ever asks you to sign a blank form or refuses to submit your return files electronically, start looking for a different preparer.