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February 12, 2015 | 4-minute read (641 words)
Startups are, almost by definition, cash-strapped. Given that, keeping a tight rein on expenses is in most cases a smart thing to do. But there’s one area where you don’t want to be overly stingy in allocating spending. Taxes.
On the one hand, good tax help should not cost you a fortune. On the other, tax compliance is an area where cheaper is not necessarily better — or even equivalent. The axiom that you get what you pay for certainly holds true here. So why shouldn’t you choose the guy who offering the cheap flat fee versus the tax professional charging a larger sum? Below are 3 very good answers.
1. Corporate tax returns and compliance are more complicated.
Because of their greater complexity — read more opportunities for costly missteps — corporate tax forms pose greater risk than individual returns do (and don’t forget that depending on how you’ve structured your business, they will impact your individual return). As a yardstick, regional accounting firms that focus on corporate tax work generally charge a minimum of $3,500 to handle a corporate tax return. I’m not saying you need to have your returns done by a big firm, but that will give you a sense of what institutional firms charge.
2. Potential mismatch between the skills you need and what a budget tax professional can offer.
Budget tax accountants most likely get the bulk of their business from completing individual returns and handling taxes for small mom and pop businesses. That’s a whole different ballgame from startup and other corporate tax returns. If you’re considering using a less expensive tax professional make sure to ask if he or she specializes or has any expertise in managing corporate returns.
3. Insufficient experience with high-risk tax situations.
There are several scenarios in which it is critically important to have an experienced corporate tax professional preparing your corporate return, even if you’re an early-stage startup. Here are a few examples:
Your choice of tax professional can have a big impact on your business. As a founder, you can save yourself a lot of worry and financial exposure by hiring a provider who specializes in corporate returns and can efficiently meet your tax compliance needs.
And once you find someone who works well, make sure you’re not waiting until the last minute to sync them up with your financial picture and developments. The right tax professional can be a source of strategic and tactical advice at various points during the year, keeping you on track and helping you to engage in proactive tax planning that saves you money and minimizes the burden of compliance: removing one more strain and freeing you to focus on growing your business.
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