Every year, I take my documents to my accountant and have him prepare a tax return for my business and a joint tax return with my information and my husband’s information.
Having a tax professional assist us has been great, since it saves time and frustration. Plus, a tax professional often knows about changing tax laws and can quickly help you identify ways to save with the help of deductions and credits. I also like to take a few minutes to plan tax strategy for the coming year.
As you choose a tax professional, keep the following items in mind:
Specialty
My tax professional has a specialty in preparing returns for the self-employed. He is a CPA that specializes in small and home businesses, as well as in individual returns. If you have a lot of real estate income, it can make sense to look for a professional with special experience in real estate taxation.
Consider your own individual needs, and then look for a tax professional who has experience in preparing the types of returns you are likely to use. Having experience on your side can be a great help down the road.
Credentials
Don’t forget to check into the credentials of your tax preparer. My tax professional is a CPA, and he keeps up with the necessary certifications. You want to make sure that all of the certifications of your tax professional are up to date.
You don’t have to use a CPA for your taxes. Enrolled agents are licensed by the federal government to prepare taxes. You can also use a tax attorney or a trained tax professional at a chain tax preparation company. Just make sure you verify the credentials and know that the tax preparers training is up to date.
Comfort Level
Do you feel comfortable with the tax professional? My tax professional and I often chat away like old friends while he’s preparing my returns. One of the things I like about him is that everything is taken care of while I’m sitting there. He uses his computer software to fill in items, we talk about the return, and I answer questions. It takes about 90 minutes, but it’s nice to know that he’s the one preparing the return, and I can see the results immediately after he finishes.
You can meet with tax professionals in advance to get an idea of what to expect, and what you are comfortable with. Find out who will be preparing your return, and whether it happens while you are there, or whether you leave your information. Choose a professional with a process that you are most comfortable with.
Cost
Finally, consider the cost. Many tax preparers have flat fees for preparing tax returns. You might pay a flat fee for a 1040, and a Schedule A, and then pay a small additional fee for each additional Form or Schedule. The same might apply to business tax returns. Ask how much each return costs, and what charges are made for additional paperwork.
A good tax professional will provide you with an itemized list so that you know exactly what to expect. Avoid tax preparers that charge a fee based on the size of your refund; these are often preparers that engage in shady practices. You might also be wary of hourly professionals. A flat fee is usually your best bet.
What works for you is likely to depend on your situation, and your preferences. Ask friends and family for recommendations, and shop around. Don’t be afraid to take a little time to find the right type of tax professional for you.