As your business grows and evolves, you will begin to require things you didn’t when you first started out. You will need to improve and elevate your processes and support systems as your business changes. One of the areas where this will be most apparent is related to your finances.
Your business will eventually hit a point where you need professional financial services — including a professional tax accountant.
So, when should you hire an accountant for taxes? How do you know when it’s the right time?
To help you decide, here are a few factors to consider.
Why Hire a Professional Tax Accountant for Your Business?
You can file taxes for your business without a professional partner, but there are many reasons why you can benefit by hiring a pro. If the cost of the service is holding you back, consider that you could actually pay less and save more when a professional tax accountant files your taxes.
Here are a few examples of how a professional tax accountant can help you.
- Get every deduction. Many business owners don’t know every deduction available to their business so they miss out on opportunities to decrease their tax liability.
- Don’t miss any deadlines. If you’re busy running your business, you might not be paying attention to every tax deadline. A professional will make sure you file everything on time, all of the time.
- Avoid penalties. Missing tax deadlines isn’t just stressful, it can be costly. Making errors on filings or filing late can lead to penalties, interest, and fees.
- Decrease your chances of getting audited. A professional knows what red flags might trigger the IRS into an audit. When you work with a professional, you may be able to decrease the chances of experiencing an expensive audit.
- Consider your taxes all year — not just at tax time. The best tax plans aren’t drawn up the weeks before your taxes are due. They are planned throughout the year so when tax time comes, you already have taken steps to potentially increase your deductions and decrease your tax liability.
When Should You Hire an Accountant for Taxes?
The benefits of hiring an accountant for your taxes will almost always outweigh the options of doing your taxes on your own. Paying for professional tax services can often help you save money in the long run.
But if you still aren’t sure if it’s time to move toward a professional option, here are a few situations where it would be beneficial to hire an accountant for your taxes.
1. Your business is growing and/or becoming more complex.
As your business grows, your revenue and expenses grow. Your financials become more complex, and you have more options to both optimize your taxes and make errors. If your business is changing or expanding, it’s time to have a professional tax partner by your side. The right partner can even assist with setting up your back office accounting so you are even more prepared and organized when tax time arrives.
2. Your business tax burden is high.
If your tax burden is high every year, it could be because you aren’t optimizing your taxes to benefit your business. Tax planning with a professional allows you to analyze and arrange your finances to legally maximize tax breaks and minimize tax liability. A tax professional knows what financial adjustments can benefit your business and guide you to make tax decisions that are good for your business all year long — not just at tax season.
3. You aren’t taking any (or many) tax deductions.
It can be difficult to keep up with all of the rules and changes that dictate tax deductions. A tax professional knows all of the small business tax deductions that are legally permitted (there are more than you probably think), and they can make sure you don’t miss any deductions that could be beneficial for your business.
4. Your personal tax burden is high.
Many entrepreneurs start off with a basic tax status. They have an LLC and pay taxes on their business income through their individual taxes. But as a business grows, there is often a benefit to switching the tax status of the business to an S-corp, as this can decrease your personal tax liability. A professional tax partner can help you determine if the time is right to change your tax status and help you take steps to make the switch.
5. You are about to miss a tax deadline.
Missing tax deadlines can be costly and stressful. A tax partner can manage the calendar to make sure you are prepared to hit every deadline. They can also work to file a tax extension so you have more time to get your finances in order — without paying fines, fees, and interest.
6. You aren’t keeping up with changing tax regulations.
Tax regulations are constantly changing. As a business owner, it’s unlikely that you will be able to keep up with every regulation and rule that exists in the tax code. Tax partners are educated and well versed in the ever-changing tax regulations. You can rely on their expertise and knowledge to feel confident that you are optimizing your taxes to the best of your abilities while following all legal requirements and rules.
Hire an Accountant for Your Business Taxes
So, when should you hire an accountant for your taxes? Sooner than later.
Your job is to run your business. Not be a tax accountant. A tax professional can not only take the task off your plate, they can likely execute it better than you can — helping decrease your tax liability and save money.
If you are ready to find a tax accountant to partner with your business, let’s talk. Learn more about CFO Solutions business tax preparation services or schedule a call with our founder, Susan Nieland today.
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