small business tax help

Choosing a Tax Preparer for Your Business

Drive-thru:

  • Determine the type of tax preparer that fits your business needs from an accredited tax preparer to a tax attorney.
  • Make sure the preparer you select holds a current license or certification in your state.
  • Go with your gut. If you don’t like the person, find someone else who seems trustworthy.
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Small business owners have enough hats to wear without preparing their own taxes. Selecting someone to do your taxes isn’t difficult, but it does require due diligence. You need a qualified expert whom you trust, and whose fees you can afford.

Check out these tips for choosing a tax preparer for your business.

Who Qualifies as a Tax Preparer?

The IRS defines a tax preparer as anyone who receives compensation for preparing all or a substantial portion of any tax return for another individual. Their definition includes people who provide a taxpayer with sufficient information and advice to complete a tax return on their own.

Ask a tax preparer how many returns he or she prepares each year.

The key here is that the person is paid to prepare taxes. If an individual prepares a tax return for another and is not compensated, they are not a tax preparer in the eyes of the IRS. As there are no national educational or professional requirements for tax preparers, it is entirely up to you to find a competent and trustworthy preparer.

Types of Tax Preparers

Tax preparers come with a variety of skill sets. Not all CPAs prepare taxes, and not all tax preparers are CPAs. Tax preparers can be generalists, or they may specialize in a particular area of tax law.

  • Enrolled Agents are federally licensed tax practitioners who have passed a background check and an exam that covers all parts of the tax code or have at least five years of experience working in a qualifying position for the IRS.
  • Certified Public Accountants (CPAs) typically have a bachelor’s degree and must hold a license from your state’s board of accountancy.
  • An Accredited Tax Advisor has taken a Master’s level six-course program administered by the National Endowment for Financial Education. This individual is capable of handling complex returns for businesses and individuals as well as of providing guidance for estate and retirement planning.
  • An Accredited Tax Preparer has completed a basic tax preparation course administered by the National Endowment for Financial Education. This person is capable of preparing basic returns for individuals, partnerships, and corporations.
  • A Tax Attorney is a lawyer who specializes in tax law.

National and local chains of tax preparation services are also available, but these services are more appropriate for routine individual returns.

Selecting the Right Tax Preparer for Your Business

Accredited tax preparers and advisors, enrolled agents, CPA’s, and tax attorneys are all equipped to handle business tax preparation. The choice depends on the complexity of the return and the other services you require.

However, regardless of their title, the first thing to ask is whether the individual has a current license or certification. The tax laws change every year. Most tax preparers either keep up with the changes voluntarily or are required to do so by their licensing body.

Next, ask how many returns the preparer does each year. An individual who makes his or her sole living from preparing taxes should be performing at least 100 total returns a year. Most full-time preparers do 300 to 500 returns annually, depending on the complexity of the returns and the support staff available to them. To be qualified to perform business taxes, at least one-third of the total returns prepared should be business returns.

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Once you have found a preparer with the requisite certification and experience, find out if that preparer provides any additional services you might need. These may include helping adjust your tax payments for the following year or representing you in front of the IRS in case of an audit.

Now, you can ask about the fee structure. Most preparers charge a flat fee for each tax document they prepare or the number of lines they fill. Others may charge by the hour. Ask for an estimate to get an idea of how much your tax preparation may cost.

Finally, can you work with this person? If you are not comfortable, find someone else. You need someone you can trust with your financial information, and who has your best interests at heart.

Choose your tax preparer wisely and with care. Find an experienced certified preparer you trust, who has the experience to handle your business taxes. For more information, visit the IRS business tax webpage.

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