6 Tips for Choosing a Competent Tax Professional
Choosing a tax professional for your small business is a major decision that merits careful consideration. Bonnie Lee, in an article published on Fox Small Business Center, emphasizes the importance of finding a tax preparer who understands the implications of owning a small business.
6 Tips to Consider When Hiring Your Tax Professional:
1. Certification is essential. Lee says that 60% of tax processionals are not qualified or certified. Only two states, Oregon and California, require licensing and testing. And for a few states such as New York, who do require registration, it is easy for someone to simply pay a small fee to become registered. In case you’re ever audited, you want a CPA who is capable of protecting you.
Lee warns small business owners, “Although a tax professional who is not an enrolled agent or a CPA can prepare the return, they are not allowed to represent you in the event of an audit. Just because they’re in a nice office, wear a fancy suit, and have lots of diplomas on the wall, doesn’t mean they know what they are doing nor are they held to IRS standards via Circular 23.”
2. A qualified tax professional can help you select the right entity and advise you as your company grows. Small businesses grow and change rapidly. For example, Lee points out, you may start as a sole proprietor, but later you may be ready to incorporate. Your tax professional should be able to track your progress and advise you on the tax consequences of each entity selection, she says.
3. Find a tax professional with experience in bookkeeping and financial statements. A tax pro familiar with financial statements can see deeper into your financials, anticipating major liabilities and helping you plan. Lee suggests you might find an excellent referral from your Chamber of Commerce or other entrepreneurial networking groups.
4. Know your tax preparer’s background. Asking the right questions is essential to selecting the right candidate. Learn how long they have been in business, if they are long-term members of a community, and whether they can provide references. With 75,000 pages of tax code, the more knowledge and experience they have, the better they can serve your business.
5. Excellent communication is essential when working with a tax professional. Be sure you understand and feel understood by your prospective tax preparer. It is important your candidate is approachable, easy to understand and a good listener. Good communication will ensure a smooth working relationship and help avoid costly problems over time.
6. Make sure your tax professional is available after tax time. You should be able to contact the tax pro throughout the year as needed.
To illustrate the importance of year-round accessibility, Lee quotes CPA Lloyd Leuthner, who says, “It’s important to know where the tax pro is going to be after tax season is over.
The tax pro should be available to answer questions. Things come up – I’m buying a new vehicle or piece of equipment for the business, should I buy or lease?”
To read the original article in its entirety, please visit Fox Small Business Center.