With tax season just around the corner, businesses are all getting ready for another round of filing taxes.
If you haven’t yet, you might want to consider hiring a tax preparer.
Having a tax preparer comes with a lot of benefits to you. However, before you hire one, there are a few things you should be aware of.
In this article, we’re going to have a look at five things you should know before you hire a tax preparer.
At the end of it, you’ll be ready to go and hire a tax preparer for your business.
What is a Tax Preparer?
Before we look at hiring a tax preparer, it’s essential to know what exactly a tax preparer is first.
Tax preparers are not necessarily CPAs – or certified public accountants. CPAs can prepare your taxes for you, but they also have more qualifications and expertise than tax preparers.
What’s more, a CPA can help you handle and manage your business’ finances, while all a tax preparer is qualified to do is to help you with your taxes.
That is why if all you need is help filing your taxes, a tax preparer will be a good choice. But if you want more services, you’ll need a licensed CPA.
5 Things You Should Know When Hiring a Tax Preparer
Now that you know the difference between tax preparers and CPAs, let’s look at some things you should know when hiring a tax preparer.
1. Tax Preparers Come WIth a Lot of Benefits
If you’re wondering whether hiring a tax preparer is worth it, consider how many benefits you will get if you do.
A tax preparer can:
- Save you money
- Save you time
- Help you with tax issues
- Update you on all the current laws and regulations
- Save you from stress
As a business owner, you may qualify for a dozen tax deductions. If you are unaware of these, you’ll end up paying a lot more taxes than you have to.
That’s why having a tax preparer to help you out will save you a lot of money. They can help you with all the expenses you may deduct from your taxable income.
What’s more, a tax preparer can also review your previous returns. They can spot out places where you missed deductions and amend them for you.
Hiring a tax preparer can also be a huge time saver for you. Yes, you could file your own taxes if you wanted to, but how long would it take?
As a non-professional tax preparer, you can spend precious hours trying to get your taxes right. Hours that you could have used working on your business or spending with your family!
When you hire a tax preparer, your taxes will be done quickly and effectively.
Also, a tax preparer can help you navigate through any issues that may arise.
Taxes are complicated. If you go in alone, you’ll meet many roadblocks and questions that most people don’t know the answers to.
But a tax preparer?
They know taxes like the backs of their hand. That’s why any issues you run into, they can quickly resolve them. Any questions you have, they can quickly answer.
Tax laws and regulations are also subject to change. That’s why having someone who knows everything about taxes as it happens is vital.
You don’t want to be caught by the IRS following outdated principles. A tax preparer will make sure you are complying with all the current laws and regulations.
Finally, a tax preparer will save you from a lot of stress.
Doing taxes is not only time-consuming, but it’s also stressful. When you hire a tax preparer, you’ll find that it’s a huge relief.
You won’t have to worry about your taxes again since you have a professional working on it for you.
So if you’re unsure about hiring a tax preparer, think about these five benefits.
2. Cost of Hiring a Tax Preparer
The cost of hiring a tax preparer ranges anywhere from $150 to $450. This depends on the complexity of your taxes and the services that your tax preparer provides.
If you go for cheaper options, you’ll find that they get the job done. However, they might not be able to maximize your tax savings for you.
Furthermore, cheap tax preparers often don’t have access to tax software, which can drastically reduce the amount of errors tax preparers make. See the list of top tax software for tax professionals.
Finally, the more credentials and qualifications a tax preparer has, the more they will charge for their services.
Again, if your taxes are simple, all you need to spend is around $150. But if your situation requires expert knowledge and services, you’ll need to spend a bit more.
3. Limited vs. Unlimited Representation Rights
Another thing you should know before hiring a tax professional is the difference between limited and unlimited representation rights.
If your tax preparer has limited representation rights, they can only represent you in some situations.
According to the IRS, limited tax preparers can represent you “only before revenue agents, customer service representatives, and similar IRS employees.”
On the contrary, CPAs, EAs, and tax attorneys have unlimited representation rights.
IRS allows tax preparers with unlimited rights to “represent their clients on any matters including audits, payment/collection issues, and appeals.”
Keep this in mind as you hire a tax professional.
4. Tax Preparers Make Mistakes
When you’re paying for a professional service, you surely expect there to be no errors. However, you also have to remember that tax preparers are humans.
That’s why before you sign and send your returns, it’s crucial to review them first. A tax preparer can save you time, money, and stress, but it’ll all come tumbling down if there are errors.
What’s worse, if there is a mistake in your taxes, the IRS will go after you, not your preparer. That’s why it’s critical to double-check, even if you trust your preparer.
This is especially true if you are hiring a cheaper tax preparer.
5. You Need to Prepare As Well
Last but not least, you’ll need to prepare as well.
Hiring a tax preparer does not mean that you can throw your hands in the air and not care. You’re still going to have to help your tax preparer do his job correctly.
Before you meet with your tax preparer, have your receipts and other documents ready. You’ll also want any business records you have.
This way, the transaction will be easy, smooth, and fast.
And there you have it! The five things you need to know before hiring a tax preparer.
Hiring a tax preparer certainly has a lot of benefits. However, if you’ve never tried hiring one before, you might not know what exactly to look for or what to expect.
But with this short and straightforward guide, you’re now ready to hire a tax preparer.