Whether large or small, businesses can go through certain challenges when it comes to their finances. From drawing up a business plan or becoming aware of certain tax issues, the best way to ensure that your finances are in good standing is to hire a professional. A tax professional is an expert in the field of finances, having specific training in tax laws, which means they are able to keep you up to date on whatever changes occur every year regarding tax regulations.
Whether we’re talking about learning what a disregarded entity is or doing actual tax preparation, a professional is ideal for the job. In order to meet IRS requirements, professionals have to be either tax attorneys, enrolled agents, or certified public accountants. If someone is outside those categories, then they do not meet the requirements established by the IRS in order to serve as a tax advisor, which means they might not be the best person for the job. The ideal candidate has specialized in the tax field and also has experience.
Types of Tax Professionals
Since we’re talking about businesses, owners should look for a tax attorney that specializes not just in personal taxes but in business tax. While general attorneys might have some knowledge regarding taxes, they might not be up to date on the current regulation, and their advice might not be useful.
Alternatively, owners could hire enrolled agents – who have qualified to represent the business before the IRS – or a CPA (certified public accountant). It’s important to note that there is a difference between an accountant and a certified public accountant – the latter being licensed to practice in the state your business operates in and has the expertise to deal with business taxes. In theory, anyone is capable of preparing tax returns, but you want to hire someone that has experience and that is, of course, registered with the IRS.
Do It Yourself Approach?
While you might have some knowledge regarding taxes, it’s much better to be safe and have a professional by your side. A pro will be able to answer all your question regarding the latest developments in tax laws and will know of the best solutions when it comes to preparing the business’ finances.
Of course, there are certain individuals and companies that do their own taxes in-house without the help of a tax professional, but the DIY method can be a risky one when it comes to taxes. First of all, the process can cost you a lot of time due to its complexity, but the most important part is that there is a risk of error. Hiring a professional might not be cheap, but taxes shouldn’t be an area where corners should be cut, due to the fact that things could turn bad and your company would be in a not-so-good position.
A tax professional will be by your side for the entire road and will ensure that the process goes smoothly before, during, and after tax preparation. Given that tax planning is a process that goes throughout the year and it’s not something that gets done at the end of the year, you will be able to consult the tax pro at least every quarter in order to figure out methods in which taxes could be minimized. The idea of hiring a professional might not sound very appealing – given the fact that they might not come cheap – they could end up paying their own salary as a result of navigating you through the process in order to keep the tax bill low.
Of course, having the expertise of a professional in your arsenal doesn’t just mean getting their advice, it also means that they will do the work to prepare the business’s tax return. And finally, after the tax return gets filed, the process might not be over just yet either for your business and for the tax professional. There is always the chance of getting audited. In case you get audited, it seems like a logical step to have the person who acted as a tax preparer be the same person that can help your business stand before the IRS. Given that the professional is IRS-regulated, they will be able to represent you during an IRS audit without any problem