Do You Need an Accountant to Do Your Small Business Taxes? Maybe Not
Tax season is here. Do you need help getting the paperwork filled out and filed to fulfill your obligations? While many Americans have simple finances, it’s a good idea to seek professional guidance if you’ve had any major changes to your financial life this year. For example, if you bought a home, took out a small business loan for a new venture or added to your family, your tax situation may be different.
Many people assume a Certified Public Accountant (CPA) is the only choice for getting their taxes done right, but that’s not the case. There are several tax preparation professionals to choose from, each with different qualifications and areas of expertise. Knowing the differences will help you make an informed choice to get your taxes filed correctly.
Annual Filing Season Program Participants
Tax preparers who complete coursework and take an annual test of their tax preparation knowledge are registered with the IRS and can help you complete your tax returns. They are also allowed to represent you to certain IRS agents in the event of an audit, but only if they prepared your return in the first place.
There are no minimum education requirements other than the IRS coursework, and for this reason a tax preparer of this caliber may be less expensive than fully credentialed ones. You may find them working for national chains or elsewhere in your community.
Enrolled Agents (EAs)
An Enrolled Agent is a tax preparer who has passed the IRS’s Special Enrollment Examination, which tests them on all aspects of tax planning, filing for individuals and business and representation (helping you through an audit). To maintain their license from the IRS, they also need to have completed continuing education courses every three years. A college degree is not required for EAs, though individuals may have a diploma.
In many ways, an EA is the ideal choice when you need help preparing your taxes because it’s their main focus. If you need more comprehensive help with your business finances or your personal investment planning, an EA won’t necessarily be able to help you with those extra services.
Certified Public Accountants (CPAs)
Most people immediately think of accountants when tax season arrives. CPAs are licensed by the states they work in, and each state has a different exam and licensing requirements. To prepare for the CPA exam, accountants complete an accredited university program; they also complete continuing education credits to maintain their license.
While some accountants specialize in tax preparation, others focus on a range of services, including payroll, bookkeeping, preparing financial statements for businesses and analyzing business finances. CPAs are a great choice if you own a business and are looking for a one-stop shop for financial services. If you only need tax preparation help, though, you may be overpaying if you hire an accountant.
Lawyers may choose to specialize in many areas, and tax law is one of them. Attorneys are licensed by the bar association in the states where they practice; to be admitted to the bar, they need to have passed the bar exam. Lawyers are highly educated, having graduated from an undergraduate university program as well as an additional three years of law school.
Tax attorneys well versed in legal matters can be particularly helpful in the event of an audit or more serious tax problem. Some may also deal in tax preparation and filing, but their fees are likely to be higher since you’re paying for a great deal of education.
Finding a Tax Preparation Professional
Once you’ve decided which tax professional is right for you, you can search for one in your neighborhood through the IRS database. It’s always a good idea to check references as well. When you choose the right professional, you can build a strong relationship for years to come.