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Posted by Freddie Cook, CPA

What You Need to Know When Hiring a Tax Specialist for a small business 

What You Need to Know When Hiring a Tax Specialist for a small business 

Business owners have the responsibility to file their business taxes annually and you might want to begin planning your future business taxes for the next tax season and consider looking for a tax professional to help you out. This article reveals what you need to know about the tax professional, what are the credentials needed and how can they help you concerning your business taxes. 

To begin with, a tax professional is someone more than a tax advisor. They have good experiences and needed credentials in order to help you with your taxes mainly business taxes.

Why do you need a tax professional? 

It's very important to have a helping hand to whom you can give your trust to with regards to your business taxes and having tax professional could be the answer so if you haven't had anyone yet, better start looking now. The purposes of a good tax advisor are written below.

  • You can save money during tax time.
  • You don't need to waste energy taking out your records. It's just like a pain you feel when you go to the dentist. I bet you won't like that.
  • They can also help you by the time you get audited.

What is a Tax Professional?

Is someone as a tax advisor, a financial expert that has knowledge and training about tax laws.  

You have to remember that a tax professional is advised to be updated on present tax regulations because it varies yearly.

The IRS decides the type of professionals who can practice before them. They are the one who regulates Tax advisors. Those who are counted on the list are CPAs, attorneys, enrolled agents and other registered tax return preparers. 

What does a Tax Professional do?

A tax professional offers significant support in your business taxes on the whole duration of the tax preparation. This means that they can help you before, during and after. Refer to the specifics below.

Before the Tax Preparation 

Tax planning is important and is not done just before the end of the year. This goes on throughout the whole year and a tax professional advisor can give you advice regarding this. To discuss procedures for minimizing your taxes legitimately to avoid and not to evade, you can refer with your tax advisor at strategic points during the year, like every quarter, at the least. Like the major tax law change in 2017, tax professionals are currently with tax laws and regulations too we're in they can advise you to be guided with these changes that will help you maintain a lower tax bill.

During the Tax Preparation 

Most likely your tax professional could also be your tax preparer which does the work of preparing your business tax return and personal tax return. In order to coordinate your tax savings, the same person should accomplish both of your returns if you are going to pay your business taxes through your personal tax return. For instance, a loss of your little business taxes (through Schedule C) can be applied to your personal tax bill to minimize your total taxes. Also, Self-employment taxes are a lower business income that you must pay directly along with the income taxes. 

After the Tax Preparation 

The work for your tax professional does not end after filing your tax return. There is still work they need to do if you get audited. It is just right to have your tax preparer be the person you seek help to if you receive a letter from the IRS informing you that you are being audited. Your tax preparer should have been in a good position to represent you during the audit before the IRS. 

Take note that IRS-regulated tax professionals which include CPAs, lawyers, and other registered tax preparers can attend with you to an IRS audit or represent you at the audit.

Who can be a Tax Professional? 

As stated above, the IRS enumerates different types of financial professionals who can serve as tax advisors and can represent a taxpayer before the IRS. There are requirements set by the IRS to become an eligible tax advisor. If you fail to meet those conditions then you can't be a reliable tax advisor. 

1. A tax attorney: A general attorney might not have the current knowledge of business taxes which disables him to provide good advice so look for an attorney that has expertise in business taxes and not only personal taxes. 

2. A certified public accountant (CPA): Be aware that an accountant is not a CPA. Look for a licensed CPA that practices accounting in your state and who has knowledge and expertise in business taxes.

3. An enrolled agent: This is a qualified tax professional that can prepare taxes and represent taxpayers to the IRS. Also, you cannot represent taxpayers before a tax court if you are an enrolled agent.

Precaution: Remember to read about the mistakes when hiring a business tax preparer to prevent getting into trouble.

Tax Professionals Preparing Business Taxes 

In filing business taxes, it could be done by anyone else but you might as well prefer the one with a good experience. Even your brother in law could prepare your business tax by using a tax preparation software but a tax preparer who is paid needs to apply to the IRS and will receive a Paid Tax Payer ID (PTIN). You can also read more on how to look for a good tax advisor or tax preparer. 

Freddie Cook, CPA
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