Affordable Tax Preparation Should Cover all the Bases
Care should be taken in seeking affordable tax preparation services. Operating a business means constant monitoring of income and expenses. Of course, the cost of bookkeeping and tax preparation services is an expense you should also consider. The key is to not sacrifice on the back end because of a cost decision you make on the front end.
Affordable tax preparation should not just be an end-of-year gathering of documentation and filling out the many tax forms. There is a lot of process and planning that can go into affordable tax preparation to get the desired result: tax savings. Short-changing the process and not planning carefully can result in more money leaving your pocket and going to the government.
Why a CPA’s services are not overkill for tax preparation.
The Certified Public Accountant will likely not actually prepare your tax forms, as they will have employees for that. However, they will oversee the process and inspect the results for accuracy, compliance, and maximum savings on business and personal taxes. Saving a little money by hiring a tax preparer separately from advice from a CPA can cost you dearly. The CPA stays informed about IRS regulations and new tax initiatives while keeping their employees on the right track to save you money.
Organization, Classification, and Categorization are important.
The end-of-year activities to pull together documentation and prepare the various tax forms accurately are streamlined and more accurate when a process is in place for all the information. Affordable tax preparation can become less affordable if you dump a box of receipts on their desk for them to get to work from scratch. Using a full service firm, especially one with a CPA, will assure that the “tax preparation process” starts at the beginning of the year. It also uses information from previous years’ tax returns.
One of the best reasons for proper classification and categorization of expenses is in the attempt to avoid audits by the IRS. Having expense categories that are not in line with your type of business can trigger closer examination when IRS computers find issues. When some deductions or expenses are improperly categorized, the category can inflate to a point that the amount triggers the IRS computers that there could be a problem.
Tax preparation can yield opportunities.
If affordable tax preparation means a robot-like process of taking totals from input and putting them into the proper boxes on tax forms, there are probably many missed opportunities. Not only can savings be realized in the current tax year, but the right preparer will also recognize missed opportunities or see where changes will save tax dollars in the future.
Tax preparation as a service of a firm with a CPA and trained advisors can spot areas in the current return that can suggest changes in future years that will save tax dollars. These opportunities can be long term and major tax savers, such as retirement account planning. The key to tax savings is to view affordable tax preparation in the full context of what you pay in taxes over time.