It can be tempting to do your own taxes. For one, you know more about your business than anyone else. And, if you’re operating on a tight budget this year, the cost savings of DIY may appeal.
If you have a strong background in finance or taxes it may make sense for you to complete your own business tax return. But for many companies, the expertise and potential savings a tax professional brings to the process may be worth the investment.
“I tell clients that the real value is my knowing which provisions to take advantage of to present the right tax return to get the best possible outcomes,” says Bruce McVittie, CPA, President of McVittie Financial Advisors of Newton, Mass. “I’ve seen with some clients that it is far more expensive to fix a mistake than to hire the help in the first place.”
Here are seven benefits to engaging a pro in the tax preparation process.
1. Expert advice.
Tax regulations are complicated and can change annually. Your tax professional makes it their business to stay on top of those changes and can offer you valuable information and advice to help you take advantage of potential tax savings and comply with company obligations.
2. Time savings.
Tax preparation can be a time-consuming process. As a small business owner, your time may be better spent working toward company goals, focusing on customers or otherwise building your business. Delegating tax preparation may free you up to focus where your efforts can have the greatest impact.
3. Understanding pandemic-related tax implications.
Even if the Paycheck Protection Program (PPP) has not complicated your company filing, the dynamic nature of 2020 may have prompted action that has tax implications. Steps such as closing an existing venture, furloughing or retaining employees, providing emergency paid sick leave or emergency paid Family and Medical Leave under the FFCRA, or making an investment in your business may have associated tax-saving opportunities or liabilities.
4. Reduced risk of mistakes.
If you do your own taxes, you may miss deductions, credits and exemptions. A professional can help to ensure you take advantage of every opportunity — expertise that could end up saving your business more than the cost of their fee.
If you are audited, it’s good to know someone has your back. When you hire a professional to do your taxes, that tax preparer may be able to represent your business before tax authorities if questions arise about your return. Because of their experience, professional tax preparers may be better equipped to work with tax officials during an audit than you.
6. Better record-keeping.
Unless you’re an accountant yourself, you probably didn’t start your business because you love bookkeeping. A tax professional can set up a record-keeping system specifically tailored to the unique needs of your business, a benefit you’ll appreciate year-round.
7. Peace of mind.
Tax preparation isn’t something you do every day, and it can be stressful. Professionals often guarantee accuracy, and the comfort of having someone who understands the process guide you through filing can be worth every penny.
How you handle your taxes is an important decision. Consider your options early, so you’re prepared when it’s time to file. Gathering all your necessary tax documentation and forms well in advance will set your business up for success and help you choose the right strategy for your needs.
This information is only provided for general informational purposes, and should not be considered as offering individualized tax advice. Please consult your tax advisor on specific issues related to your tax situation.