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- As a small business owner, accounting and taxes can take up a lot of time and focus - I'd rather hire a professional to prepare for tax day 2020 and spend my energy on other things.
- A good tax professional goes way beyond preparing your tax return - they can help you plan for the future and avoid costly mistakes.
- If you're thinking about starting a business, working with a professional at the beginning can help make sure you're set up for success.
- Read more personal finance coverage.
For many years, I did my taxes on my own - user-friendly tax software is widely available, and I felt like taxes were just an extension of other financial tasks I do alone, like online banking and paying bills. But a few years ago, I started working with a certified public accountant to do my taxes, and I've never looked back.
And, it doesn't even have to be that costly! I pay my CPA $350 each year to file my taxes, but I handle my regular bookkeeping on my own.
Here are a few reasons why I decided that working with a CPA or an EA (Enrolled Agent) makes a lot of sense.
1. Getting started on the right foot makes a huge difference
I consider myself lucky that I started working with a CPA right when I started my business - that helped me set up all my accounting systems and record-keeping the right way from the beginning, rather than having to go back and fix things later.
Even if you're not sure you want to commit to working with a CPA or an EA long-term, if you're thinking about starting a business it can make a lot of sense to work with someone at the beginning to at least get yourself set up for success.
2. Tax planning can have big benefits - and avoid big mistakes
Most people only think about taxes when it comes time to file, but CPAs and EAs can help you plan ahead for next year's taxes while you still have time to maximize your benefits.
Whether it's saving for retirement, managing your investment portfolio, scheduling quarterly payments to avoid a big bill at the end of the year, or making strategic business decisions to take advantage of tax credits and deductions, working with a tax professional outside of tax season can pay off in a big way when the next filing deadline comes around.
3. Tax laws change every year, and CPAs and EAs keep up with the latest developments
The Tax Cuts and Jobs Act of 2017 brought about the biggest change in US tax law in decades, but the law hadn't stayed the same year after year before that. Every year brings tax law changes, whether from new laws passed by Congress, old laws expiring, or regular changes to keep up with inflation.
CPAs and EAs are required to take continuing education courses every year, so they're always up to date on the latest changes and can help you take advantage of everything you're entitled to.
4. I can work with someone who specializes in the tax issues that affect me
Like attorneys and doctors, most tax professionals specialize in a particular area of tax law: personal taxes, small businesses, large corporations, trusts and estates, nonprofits, and more.
I work with a CPA who specializes in small business accounting, which means I can focus on actually running my business instead of trying to also be an expert in accounting and small business tax law. My CPA also helps me make sure that I'm keeping up with my state business licensing and other regulatory requirements - it's not just about taxes!
5. I'm less likely to get audited, and more likely to come out in the clear if I do
Audits aren't as scary as everyone makes them out to be, but that doesn't mean they're fun - they can be nerve-racking and time-consuming, not to mention expensive. Seasoned tax professionals have a good idea of what will appear out of place to IRS computer systems, and can help you avoid them, or use them strategically when they know the law and facts are on your side.
CPAs and EAs are also used to working with the IRS and state tax authorities, so if you do get audited, they know what the inspectors are looking for and how to navigate the process as efficiently as possible. And if you end up with more serious issues, they can offer crucial advice on structuring payment plans or requesting reductions and waivers on penalties.
How to find a tax professional
Did you know that there are no credentialing or licensing requirements to do business as a tax preparer? That means that simply searching online or dropping by the flashy tax office on the corner isn't likely to get your taxes into the right hands. The American Institute of CPAs and the National Association of Enrolled Agents offer free tools to help you find a trained and qualified tax professional in your area.
- More tax day coverage:
- When are taxes due?
- How to file taxes for 2019
- What is a tax credit?
- H&R Block vs. TurboTax
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