Accounting & Finance
The Pros and Cons of Using Professional Tax Services for Your Business
Just hearing the word ‘taxes’ makes most of us grown on command. Unless you’re someone who just clocks in their 9-to-5, making minimum wage, and has zero investments or side-businesses, taxes can be daunting. If you’re self-made, deciding between professional tax services and online DIY filing can be a toss-up.
There are ways to figure out if your situation favors an IRS tax pro or learning how to do it alone.
Whatever you do, don’t wait to decide on the last day of the last month like the majority of Americans.
This guide should help you gauge which method will save you the most money.
Buying Software or Hiring a Pro
Upfront cost is often what people make their decisions on when considering professional tax services or going solo. This a flawed analysis, but let’s do the math anyways.
If you want to get full-featured, intuitive tax programs, they’ll cost between $30 and $90 for software packages. Yes, there are free online alternatives, but they can be difficult to navigate.
Not to mention, tax software actually allows you to upload entire bank statements and PayPal transactions to do all the heavy lifting.
If you plan on going at it alone, you can’t afford to skimp on user features like those. I use Ultimate Tax Preparer Software to make sure nothing is left out.
When it comes to hiring a certified tax professional, not your uncle who used to be an accountant, there’s a wider range. You might be able to find someone as cheap as $60 or pay up to $1,000 if you need someone familiar with complex investments. The high-end pricing is usually reserved for those who do stock trading, real estate, and etc.
For the average business owner, you should have a good idea as to how much work will be needed to file. This can be made easier, though, if you set up your business correctly. Starting a business on a whim with little preparation can get you into legal trouble and cause you to pay more in taxes.
Time is Money
Now we move onto the real measure of value when looking at prices. If you are very busy and you aren’t meticulous with your documentation, you can’t afford to pour hours over learning tax code.
It’s unrealistic and very stressful to just look at the cost of professional tax services and think that you should save that money.
The average 1040 can take up to 13 hours to complete, according to the IRS. If you’re a business owner or have various investments, good luck trying to calculate and learn everything as you go. Do a rough estimate of how much time you can afford to take away from your work or sleep. Is it enough to file your taxes?
An experienced IRS tax professional can have your taxes done in a day or two. They’re used to procrastinators coming to them and dumping all their paperwork on their lap and expecting to have it done before the deadline.
No Costly Errors
Probably the most critical advantages of spending money on a professional preparer are accountability and precision. Consider the hours you could avoid losing from attempting to peruse and comprehend the IRS’s guidelines, exceptions, and yearly revisions. You may find that the hours you spend working over your documents and forms wind up costing you more than the maximum cost of a professional hire.
There is a ton of space for mistakes with regards to tax documents. You can protect yourself from soaking up huge penalties for getting it all wrong. An expert assessment preparer can likewise prevent overpaying because you left out a deduction or exemption in your tax forms.
Tax software doesn’t hold your hand for all the itemized deductions. Tax code isn’t made for easy check-boxing if you’re a business owner. Same goes for things like capital gains tax exemptions.
This stuff is never handled alone by those who have built their wealth by taking advantage of the tax incentives.
Not All Professional Tax Services Are Equal
It should go without saying that not all IRS tax professionals are going to know the ins and outs of complex investments. You will need to find someone who has handled high profile clients to make sure you’re getting your money’s worth. The best professional tax services stay busy and often have a limited number of seats.
Last-minute procrastinators are less likely to score an IRS tax pro who knows what to do with non-profit orgs or low-income real estate investments. It’s a good idea to ask your peers for recommendations early to find someone licensed and competent in all manner of tax code.
Tax Preparation Fees May Be Deductible
Probably one of the biggest pros for hiring a professional tax service is the opportunity to get your taxes done for a discount. Not everyone can benefit from this deduction, but it does qualify as one. Oh, this is a good opportunity to highlight the fact that you’ll get way more tax deductions as a small business with a pro than on your own.
That’s because not all of them are immediately obvious, so this is where experience plays a big role. Now, as for getting your tax prep fees deducted, it goes under the ‘miscellaneous’ items.
This includes cost of travel, postage for mailing in your papers and receipts, and etc.
If you’re using tax preparation software, you can try to include it as well. Obviously, we would say the biggest pro here in hiring a professional tax preparer is getting the most out of your itemized deductions. You have to exceed your AGI by 2% if you want these deductions to count, which can be tough calculating on your own.
Professional Tax Services are Smart
We hope this comparison of tax preparation options helped you decide which will make your life easier. The key is to pick the right investment of your time and money, so that you can focus on what’s important: your business.
We know the financial side can be tough, so keep checking our blog for more financial advice.
New guides, tips, and financial news is updated regularly to stay on top of an ever-changing, competitive world.
Social Media5 years ago
Top 5 Advantages and Disadvantages of Social Media Marketing
Management11 years ago
The man who destroyed his multimillion dollar company in 10 seconds
Innovation5 years ago
Five Common Materials Used In Manufacture Reusable Grocery Bags
Management10 years ago
If You Fail To Plan, You Plan To Fail