Tax Tips for Entrepreneurs
Choosing a Tax Professional
Preparing your own small business taxes can be a pain. Plus, you might be leaving money on the table. Here's how to chose a tax preparation professional for your small business.
Taxes are a big part of owning a small business.
Although most business owners don't object to paying the IRS what they owe, no one wants to pay more than their fair share. Tax professionals can help minimize your tax burden, but the trick is finding one that's right for your business.
In theory, tax preparation and planning should be a relatively straightforward process. Following published IRS guidelines, taxpayers submit their returns and required payments in a timely manner. But in practice, tax preparation is a highly nuanced field. The complexities of the IRS code combined with the possibility of tax-saving strategies make the services of a tax professional an absolute must for small businesses.
Unless you're comfortable randomly choosing a professional from the yellow pages, you will need to search for a tax preparer that fits your needs. You can begin your search by asking around the local small business community. Before long, you will learn which tax professionals are hot - and which ones are not. After you've compiled a list of promising candidates, the next step is to evaluate how equipped each one is to provide the expert advice your business deserves. Here are some of the things you will need to consider . . .
Like most professionals, tax preparers tend toward specialization. The most highly-skilled tax preparer can't help your company unless he has experience and expertise in small business tax preparation. Additionally, it's important to make sure your tax pro thoroughly understands the tax ramifications for your type of small business. For example, a tax preparer who works exclusively with small manufacturing operations may find it challenging to navigate the tax consequences of a hardware store with retail and inventory issues.
Scope of Services
Scope of services is another issue that needs to be addressed during the search process. Some tax preparers focus exclusively on tax returns, while others offer comprehensive services throughout the year. Depending on your needs, you may want to consider using your tax professional for tax planning consultation or even accounting services. Many times, the most effective tax professionals are those who are involved with the business on an ongoing basis. Also, you should make sure your tax professional is capable of culling your financial information from your accounting software platform.
Cost is always an issue in a small business and so it needs to be factored into your decision process. Not surprisingly, you usually get what you pay for. Although you probably don't need to hire the most expensive tax preparer in your market, you shouldn't cut corners, either. Keep in mind that a good tax professional can save your business money while a bad one can end up costing you a lot more in unnecessary tax payments.
It's not uncommon for business owners to request references from potential tax preparers. In fact, if you don't request references and conduct appropriate follow-through, you're probably not doing your job. If nothing else, the reference checking process will confirm your decision and help you sleep a little better at night.
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