It’s bad enough that you have to file a tax return. It’s even worse when you find out there is a mistake and now you have to deal with it. The best way to prevent that is to pick a good tax preparer. Why should you hire a CPA?
We understand small business owners make difficult decisions every day. They don’t have deep pockets like corporations and have to be more cautious about how to spend their limited resources. If they spend money on one thing, another could be neglected, it is a constant struggle.
As tax season is upon us, many small business owners will be making the decision of whether it is worth hiring a CPA (certified public accountant) to do their taxes.
How CPAs charge for their services?
Typically, CPAs charge for their services in one of two ways:
- an hourly rate; or
- a flat fee based on the number of forms that need to be filled out or the complexity of your tax return
The hourly rate varies, but can typically range from $100-$300 per hour or higher.
What do I get in return?
In exchange for their fees, CPAs check and double-check transactions and bank statements. They make sure that you get every deduction and credit you are entitled to.
CPAs also compare year-to-year results when they are preparing your taxes. They do this in order to identify trends and measure the operating results of your entity. If something looks unusual or unexpected, you’ll be made aware.
This trend analysis is vital, because if certain expenses are too high, it increases the likelihood that your business will stand out and be flagged for review and selected for an audit.
Tax Preparation Software
Using tax preparation software, like Turbotax, H&R Block online, etc. is an option that is okay for people and businesses with very simple tax returns.
If you are self-employed or have rental property, or capital gains from sale of investments, using a tax preparation software might not be a good fit for you.
Non-CPAs generally charge less to do your taxes but one thing to consider is that they may not be able to represent you if your return ends up being audited, unless you’re using an enrolled agent or a CPA.
An enrolled agent can negotiate with the IRS during examinations and appeals. In addition to taxpayer representation, enrolled agents often provide services and prepare federal and state returns.
Enrolled agents charge less, but they are also less qualified, and they only do tax work.
In order to receive a CPA license in the state of Florida, the applicant must complete 150 semester hours of accounting education, pass the Uniform CPA exam which consists of four 4-hour exams, have a 1-2 years of accounting experience working under a licensed CPA and complete 80 hours of continuing education every two years.
Enrolled agents must pass three 4-hour exams on tax codes and calculations or have worked for the Internal Revenue Service for at least five years in a position that required interpreting and applying the tax code. They must complete at least 72 hours of continuing education every three years.
A CPA license is the accounting profession’s highest standard of competence, a symbol of achievement and assurance of quality.
CPAs are an important resource for small businesses. Make sure whomever you decide to work with is a good match for your needs and has experience with your type of business and transactions.
Accounting Freedom Solutions LLC, (941) 284-5763
The information contained in this blog is only general information. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor about your specific situation.