To ensure your company isn't going to get an inquiry or visit from the IRS asking why you didn't pay your taxes correctly, it's key to get some help before you hit the shoeboxes full of receipts, bizjournals reported. Small businesses have enough responsibilities to deal with, and doing your taxes doesn't have to be one of them.
A good tax preparer will have a firm understanding of the current tax law, which has gone under substantial changes in the last few years, and will help growing businesses take advantage of deductions and credits, said Sara Turner, a 13-year tax veteran and researcher for the National Association of Tax Professionals, a non-profit organization based in Appleton, Wis.
But before you go out and grab the first tax preparer you can find, here are some tips from the pros on how to pick a winner.
There are thousands of tax professionals out there ready to handle your money, but it's most important to make sure they are licensed, says Caryle Breeden, spokeswoman for the National Association of Enrolled Agents and owner of a tax and accounting firm in Knoxville. Make sure you ask what licenses they hold, which should be at least an accounting and tax license, she said.
However, enrolled agents and certified public accountants are the safest choice. Each enrolled agent has to prove to the Internal Revenue Service their competence in tax matters and tax returns. Then they become federally licensed through the Treasury Department. CPAs have specific state licenses.
It's a good sign if a preparer belongs to a tax association like the NAEA or the NATP, said Turner. The organizations make sure that the preparers stay current with tax updates and have to agree by a code of ethics to be honest and act professionally.
Nancy Mathis, spokeswoman for the IRS, said businesses should first look on the IRS website to get the basics about taxes before they start looking for a professional.
Business should take advantage of the Electronic Federal Tax Payment System, explained on the IRS Web site, where companies can make payments 24 hours a day, seven days a week, Mathis said. It makes it much easier for the company, she added. The IRS gets 90 percent of it's revenue electronically.
Although preparers should be open to giving references, those do not necessarily indicate their overall performance, Breeden says. Make sure you sit down with a potential preparer with a set of questions pertinent to your business needs. Many preparers offer an free initial consultation.
The most important questions to ask a preparer are how long he or she has been doing returns and with what type of returns they have experience, Turner says. Businesses need to make sure tax preparers have experience in their particular area.
Also, Turner suggested asking professionals how they charge but don't be fooled by high prices - more money does not always mean the best services. Their experience should be the best guide.
Turner said five years of tax experience is a good sign, but company size matters.
Mathis compared the process to choosing a doctor: Talk to friends, family and business associates to get some names of the best preparers in the area.
"A professional who keeps on top can really help small businesses make the most of their dollar," she said.
And you want someone available year-round, not just during during tax season.
Keeping a good communication level with your tax preparer helps prevent problems that may arise over the year, Breeden said. Meeting with your preparer monthly or at least quarterly, with visits around the end of the year is a good idea, she says.
"I would much rather have a client who asked questions throughout the year than just during tax time," she said.
Growing businesses may not know what tax returns they're required to file or if they are completing them correctly, she said.
It's especially important to meet when your business is making big decisions, like forming a retirement plan or acquiring assets.
That way, businesses can avoid creating tax liability at the last minute.