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What should you look for in a small business tax preparer?

Posted by Shivali Anand

August 30, 2021    |     5-minute read (869 words)

One of the last things you want to do is rush around looking for last-minute assistance with your Form 1065, Schedule C or any of the other tax papers you need to complete before filing your taxes.

The complexity of IRS tax rules, along with paperwork and a bewildering array of forms, makes preparing tax returns a constant source of worry for most business owners.

Hiring a tax preparer can help you avoid the stress of this annual routine and get your quarterly estimates in on time. Professionals can assist you in taking advantage of numerous deductions and credits that you may not be aware of because they have a thorough understanding of the IRS code's labyrinthine clauses. They can also save you the trouble of having to file an extension or revision, as well as the potential for penalties.

However, where do you start looking for a tax preparer? Google "best tax preparers near me" and choose one at random from the top five search results? Certainly not! Continue reading to learn how to locate the finest tax experts to submit your returns.

Understand your requirements

The first step is to ascertain which services you require. Examine your company's goals and financial situation to see if you need assistance with record-keeping, tax planning, or figuring out the best methods to arrange employee benefit schemes and retirement programs to save money on taxes.

Tax experts come with different credentials

In the field of taxation, there are three categories of professionals. Even though they are all certified tax professionals, you need someone who also knows the intricacies and requirements as applicable to your small business.
  • Enrolled agent

This certification requires at least five years of experience working for the IRS or passing a rigorous three-part test covering ethics, corporate and individual taxes. They usually have a lot of expertise in dealing with complicated federal tax scenarios, especially when it comes to situations where the IRS is investigating firms. They have unrestricted practicing privileges, which means you may employ them to file your taxes in many states.

  • Certified public accountant

CPAs have completed a university-level accounting program and passed the Uniform CPA test. They are state licensed to provide accounting services, including tax preparation, and can represent taxpayers in front of the IRS if necessary.

A CPA’s primary responsibility is to audit financial records and guarantee compliance. CPAs are frequently hired by larger organizations or enterprises with complicated tax filings. They can, however, handle the tax demands of most small enterprises just as effectively.

  • Tax attorney

A tax attorney is a lawyer who has completed law school, passed their state's bar exam, and focuses their practice on tax issues. They have a thorough knowledge of the legal ramifications of complex tax problems since they are attorneys. They can help you if you're having problems with the IRS, require legal counsel in a U.S. court, or want to learn more about business and estate planning.

What to look for in a tax preparer

Tax professionals that claim to know everything about taxes should be viewed with suspicion. As you are likely aware, the IRS code is a tangle of tax rules, and nobody knows everything. You must ensure you find a specialist as per your particular needs.

Confirm that the individual or company providing tax services is in good standing and has a current license to practice in the state by conducting an informal background search or contacting the IRS or your state's Board of Accountancy.

Ensure that the tax preparer you contact has a valid PTIN issued by the IRS since the federal agency requires it for filing returns or refund claims. Look for someone that not only knows your requirements but also makes themselves available when you have unexpected tax issues and can assist you with planning or even replying to IRS notices. Some fly-by-night tax preparers may only open their doors during tax season and close after April 15. Look elsewhere if you find one.

Where to find a reputable tax preparer

  • Referrals:

    Seek recommendations from relatives, friends, and fellow company owners for reputable and skilled tax preparers. Referrals may qualify you for a discount from some independent tax preparers.
  • Local listings:

    Using Google or social media pages, you may readily discover tax experts in your region. Check out their reviews and ratings to see whether they're a suitable fit for your company.
  • IRS website: 

    Some professions who aren't CPAs, EAs or attorneys register with the IRS, which maintains a list of such compensated tax return experts on its official website. 

Tax preparation can be outsourced

Outsourcing could be a good option if you can't settle on a tax preparer or are in search for a more cost-effective tax solution.

Outsourcing tax services not only saves you time and money but also offers you access to highly trained tax experts who are up to date on IRS rules and have a wealth of experience at a fraction of the cost of what you may otherwise pay.

A good tax outsourcing relationship will also provide you with additional flexibility, allowing you to rapidly scale up or down the resources offered to your company based on your tax position.

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