How to Hire a Tax Professional for Your Small Business
by
Attorney Frederick W. Daily
Make sure you get the right tax pro for your business
Hiring the right tax professional for your small business is important. Getting good tax help can translate into money for your business. Ideally, you should form a long-term relationship with a tax professional so you have someone to call year-round. Because this person is so important to your business’ bottom line -- and will help ease your stress throughout the year -- take the time to learn about the different types of tax pros, how they can help, and how to choose one.
Types of Tax Advisers
Anyone can claim to be a tax expert. And people who prepare tax returns don’t have to be licensed by the IRS. Make sure your tax preparer is one of the following:
- Enrolled agent (EA). An EA is licensed by the IRS. The EA has either passed a difficult test or has at least five years of experience working for the IRS. Enrolled agents are the least expensive of the tax pros and often offer bookkeeping and accounting assistance.
- Certified public accountant (CPA) and other accountants. CPAs are licensed and regulated by each state. They perform sophisticated accounting and business-related tax work and prepare tax returns. Larger businesses or businesses with complex business tax returns often need CPAs. The larger CPA firms are expensive. Smaller CPA firms are cheaper and may be better for the typical small business.
- Tax attorney. Tax attorneys are lawyers with a special tax law degree (called an L.L.M. in taxation) or a tax specialization certification from a state bar association. Tax attorneys can be expensive. But you should consult one if you have a tax problem, are in trouble with the IRS, need legal representation in court, or need business and estate planning.
Whatever type of professional your business needs, make sure he or she has specific knowledge and experience in helping small businesses. It’s even better if you can find someone who already knows a good deal about your type of business or industry.
How Tax Pros Can Help Your Business
If you find a good tax professional, you seek his or her assistance in many ways throughout the year.
Information and advice. Your tax professional should be able to help you make key tax decisions and should provide you with basic information and advice.
Record keeping. If you loathe record keeping, have your tax pro set up a record keeping system tailored for your business. (To learn more about record keeping, see Nolo’s Bookkeeping and Accounting area.)
Tax form preparation. Most businesses can benefit from having a professional prepare their tax forms. If you do it yourself, at least run your documents by a tax pro. The tax pro can point out tax deductions that you or your software missed, as well as highlight red flags that might get you into trouble.
Advice in dealing with the IRS. If you are dealing with the IRS on your own, you can get advice and coaching from your tax pro.
Representation when dealing with the IRS. An attorney, CPA, or enrolled agent can represent you before the IRS -- so you don’t have to deal with it at all. A good tax pro knows how to handle the IRS bureaucracy.
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