Filing taxes isn’t an exact science. With the IRS changing tax codes each year, it’s easy to miss important new deductions or credits.
Take precautions when hiring your tax preparer for a small business. The wrong deductions can come back to bite you in the form of hefty fines.
Here are 6 tips for picking tax preparers.
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1. Check Qualifications
Picking tax preparers should start with the IRS Directory of Federal Tax Return Preparers. You can sort and search for a listing of preparers with the specific qualifications you need to file your business return.
2. Look for Reviews
Tax preparer reviews aren’t as common as they should be. But you can try researching the Better Business Bureau using the tax preparer’s company name to make sure you’re not picking tax preparers with a shifty track record.
The Better Business Bureau logs customer complaints if there’s a dispute or reports of a scam.
3. Get a Referral
It’s much easier to get a referral for tax preparation services than it is to find good references and reviews. There are many types of tax preparers that might not work for you depending on your industry.
Ask other entrepreneurs with similar businesses for help.
It’s easier for a tax preparer to learn all your industry’s compliance rules if he or she has been working with other business owners for years.
4. Don’t Pay Based on Refund
A tax preparer shouldn’t be able to promise you a refund. If it’s your first time working together, the tax preparer needs to review your finances before making any declaration as to where you’ll stand with the IRS.
It’s a red flag for a tax preparer to offer you the option to pay from your refund. It could mean they’re cutting corners in order to bring you a larger refund.
If you’re audited later, you’ll be responsible for paying back the amount you received plus penalties. The IRS is more likely to audit you repeatedly if you’re caught committing fraud.
Focus on comparing tax preparation fees before making a commitment to one preparer.
5. Picking Tax Preparers Locally
Even if you plan to do business in multiple cities when you start a business, hire a tax preparer in the city where you live. One exception is if your company is only registered in one state.
In that case, choose a tax preparer licensed in that state. They’ll help you navigate state laws for small business owners.
6. Don’t Sign a Blank Return
Always thoroughly review your tax return before it’s submitted to the IRS. Your tax preparer isn’t a buffer between you and the IRS.
If your return has major errors, you’re on the hook for explaining everything included on the return whether you understand the line item or not.
An Ounce of Prevention
Picking tax preparers is one of the most important steps you’ll take in setting up your business. It’s one of the most expensive decisions you’ll make for your business, not because of tax preparation fees, but because of how much damage a tax preparer can cause.
Make sure you’re using a tax preparer with integrity so you can avoid unnecessary fines for years to come. For more information and tips, visit our blog for updates.
