Cheap Tax Preparer or Accounting Partner?
Many small business owners, particularly the newer ones, can go through several tax seasons still not sure whether it is better to use a cheap tax preparer or accounting firm. If still not certain, they usually opt for the cheap preparer as an interim measure. They are concerned about cost, especially in a new small business with many financial challenges.
Cheap Tax Preparer Services
Though the level of service varies, most cheap tax preparer services offer some combination of:
- Online and in-office consultation at tax time.
- Intake of your data through software or your own spreadsheets/other data transfer. (Some offer bookkeeping as an extra paid service).
- Preparation of your business and personal tax returns.
- Some offer electronic tax filing services.
Particularly at tax time, you can see dozens of TV ads for tax preparation, some with advertised flat rate fees. Often those advertised fees will end up being expanded based on what your business needs for proper filing. There is little or no discussion of tax savings strategies, as by tax time it is too late for most money-saving strategies. There is little or no discussion of tax planning for the next year, as they do not know if you will return.
Tax Preparation and Planning Services
A great partner offer a suite of services to help you optimize your savings:
- Bookkeeping – One way in which the added partner is offset is through absorbing the bookkeeping function that the owner would have to pay for elsewhere or do themselves. Taking this load off the owner allows them to do more in their business for success. The accuracy of the bookkeeping is also assured, as it will be set up in compliance with IRS recordkeeping requirements.
- Audit Response – Appropriately licensed service providers can practice before the IRS and can take care of answering all queries.
- Entity Formation – The partner will work with the business owner to determine the best entity formation, such as whether a corporate structure is best and help with proper setup of the appropriate business structure for financial, liability, and taxation reasons.
- Estate Planning – The partner will help you to preserve your legacy with an estate plan customized for you and your family.
- Asset Protection – The partner works with you over time to constantly put in place strategies to protect your business and personal assets from creditors and lawsuits.
- Accredited Investor – Should you want to become an “accredited investor” as designated by the IRS to open better investment opportunities, the firm will help you to reach and prove that status.
It should be clear from this information that every small business owner can justify the cost of avoiding the cheap tax preparer and hiring a great tax partner.