Not sure what to look for in a tax professional or even if you need one? Business expert Barbara Weltman offers her advice on finding the right person.
I think that for many small business owners, they don't realize the value of the tax planning and what it can mean to their business. How it can really impact the decisions they make. For example, starting a qualified retirement plan is a great way for a small business owner to not only save taxes, but save for retirement income for the future. And so they may not think about this as an option unless they work with an expert. It's not what you earn, it's what you keep that matters after tax, and so you do want to understand the taxes, so you understand your responsibilities, so you don't incur penalties that could easily been avoided. You want somebody to help you, for example, make sure you have the cash on hand to pay your taxes when they come due. Usually, most small business owners pay through estimated taxes and it's a matter of cash flow to make sure that you can do that. You also want to make sure you file your returns on time, whichever returns are required, both at the federal and state level. Again, if you mess up, you incur penalties that can easily be avoided and cost you money that you didn't have to pay. When you're going to choose a tax professional, you may have a lot of questions. First of all, you want to know what the tax professional's game plan is for you. Are they going to be dealing with you on a regular basis? Are they going to have regular reviews, or just annually? Are they going to be doing just your tax returns? Are they going to be doing your books? Are they going to be providing advice for your business? And then, of course, you want to know what it's going to cost you and how are you going to pay. Is it going to be a retainer? What's the hourly rate, and what do the payments cover? You want to work with a person that really can help you advance your business. Understands your business and will be of value to you. And so take the time to search around and find the right person to work with. And somebody that you feel comfortable with and really listens to you, understands your problems and is responsive to your needs. The amount of time that you work with a tax advisor is entirely up to you and depends on what you're looking for. Are you seeking the kind of advice, or do you just want to bounce questions off of an expert, or do you just want somebody to prepare your tax return? Again, it's up to you and your situation. You do want to steer clear of anybody that makes unrealistic promises. They may be using questionable practices to reduce your taxes and that can get you into hot water with the IRS, so that something that you definitely want to avoid. It may not be easy to always know when promises are unrealistic, but somebody who you know is taking positions that are blatantly impermissible like, not reporting your income. Don't touch that expert.