When it comes to filing taxes, there has been one question that has been the bone of contention; to hire a certified public accountant to do your taxes for you or to buy a tax filing software program such as Turbo Tax?
One thing is for certain; taxes are costs in and of themselves. Therefore, if there is a way to automate the tax preparation and filing process, one should, by all means, consider it. And that is what tax filing software programs are purported to do.
However, even though these programs are quite straightforward to use, Turbo Tax and other tax filing software suffer from certain issues that are typical of any robot.
These issues become more evident when your financial situation starts becoming broader. At this point, it becomes wiser to spend extra and hire a professional.
This article will discuss why you should stop using tax software and hire a professional instead.
What You Need to Know About Tax Software
Whenever the tax conversation is taking place, people are usually either talking about tax planning or tax compliance.
Tax planning refers to the process of planning transactions way ahead before you actually do them. This allows you to make more thoughtful decisions that work towards minimizing the total amount of tax you need to pay.
On the other hand, tax compliance refers to the process of the actual preparation of your returns. Thus, it involves filling out your forms while making reports on transactions that have already happened.
And this is where the bone of contention actually lies. Tax preparation and filing software are designed for one job only; tax compliance. Thus, it will do the actual job but it will not help you make better decisions that will reduce the total amount you pay in taxes.
Consequently, as you broaden and diversify your financial profile, you will have to make increasingly complicated decisions. These decisions will be greatly affected by the amount of tax knowledge you will have, thus the dire need for financial planning. And that is why you need an accountant.
What You Should Know About Using an Accountant
A certified public accountant is the name given to a qualified accountant. For one to attain that title, they are required to pass certain numerous rigorous examinations in order for the government to grant them a license to work as a CPA. Nonetheless, CPAs in the United States are limited by geographical jurisdictions. Thus an accountant from one state cannot work in another.
CPAs, therefore, are tax experts who have intricate knowledge about taxes and the various laws affecting them. Knowledge combined with experience allows them to know what your business can do to reduce its tax costs.
This means that every business needs to seek regular advice from such a professional. However, when are the times that you absolutely need a professional?
Situations Where You Need an Accountant
1. You Find Tax Preparation and Filing too Complicated
As mentioned earlier, tax filing programs such as Turbo Tax allow you to learn how to perform your filing. While they are not that hard to use, you will need to invest your time so as to perform that task.
However, if tax filing is not your cup of tea or would rather focus your efforts on the aspects of your business that you are good at, then you are better of hiring an accountant to do that for you.
CPA for business taxes only makes for enhanced efficiency in your business since each process is going to be handled by someone who is good at it. Nonetheless, when you decide to hire a CPA, keep in mind that you will still be responsible for gathering all the data your tax professional needs to do your taxes.
2. It Is Still a New Business
If you just recently purchased your business from another person or it has been less than a year since you opened it, using an accountant is only wise.
This is because, unless you have experience running a similar business in the past, it is highly likely that there are tax laws and deduction rules that you do not know of. Hiring an accountant will ensure that you do not make costly mistakes that most entrepreneurs make when their business is still in its infancy.
3. The Status of Your Business Has Changed
There are certain complicated business moves that you can make that might warrant the need for a CPA for business taxes. One such move is a business state change.
For example, let us assume that you decided to convert your business from a sole proprietorship to a corporation. Part of this change means making sure that you properly file all the relevant paperwork. Moreover, you also need to calculate all your expenses and deductions for both types of business status to ensure that the business has no shortcomings.
This is easier said than done since you will be essentially dealing with new laws. Any errors that arise will result in fines and potential legal action. Getting an accountant to do this for you will ensure you avoid costly mistakes.
4. You Moved During the Year
As mentioned earlier, a CPA from one state is not usually able to practice in another state, and for good reason; tax laws vary between states. This means that if you move from one state to another, your tax situation is likely to get complicated.
This is why you need an accountant to help you sort your taxes out while determining how to divide your taxes payable or the refund owed between states.
5. You are Passing Through a Major Life Event
Marriage, getting kids, or divorce are life events that will impact your tax situation. If you just got married, how will you proceed to file your taxes? Will you do it separately or jointly? An accountant will help you understand the best way to go around that situation.
The same also applies to when you have kids. Another benefit of that bundle of joy is that it comes with certain tax deductions. But do you know the full extent of those deductions? A professional accountant will help you know what your options are so you can start enjoying some tax write-offs.
Divorce is an all-around messy situation. Which parent will claim the children as deductions? What rules govern taxes when it comes to child support and alimony? An accountant knows everything there is to know about these murky waters. They will help you navigate your way through them to ensure that you not only avoid problems with the law but to also ensure that you get the best deal possible.
6. You Want a Peaceful Life
Establishing a long term relationship with an accountant is one of the best life decisions you could make. You will never have to worry about your taxes being off, moreover, you will continue to enjoy their advice as your business continues growing. This means that all your ducks will be in a row at any single time. This not only helps your business but also enhances the quality of your life.
Tax filing software programs such as Turbo Tax can be beneficial when looking to save on filing costs. However, they do not give you insights that will help grow your business. An accountant not only takes care of all filing processes, but they also look into how they can help your business make better decisions so as to reduce those expenses. This results in major savings and growth in the long term.
Looking for an accountant to help you with your business taxes? Talk to Choice Accounting Solutions today and we will customize a solution for you and your business.