Four questions the small business owner can ask to find the right tax advisor
Owning a small business is one of the most common triggers of increased tax complexity and a good reason to get a tax advisor. To find the right tax advisor, small business owners should set up a meet-and-greet with any candidate they’re considering.
After describing their company and its needs and goals, the small business owner should be ready to interview the advisor. These questions are a good place to start:
“What’s your tax background?”
First, define a tax advisor’s credibility by asking for professional credentials and background. Experience is key when it comes to taxes: knowledge can translate into dollars saved. Tax rules are always changing, so it is critical taxpayers select a tax professional who receives ongoing training. In addition to asking about ongoing education, taxpayers should ask about a tax preparer’s years of experience. Do they have the knowledge to act in the taxpayer’s best interests?
Taxpayers should also know the tax preparer’s area of expertise before allowing them to do their taxes. A sick patient wouldn’t see an eye doctor for a head cold and a small business owner shouldn’t consult a tax professional who doesn’t normally do small business returns.
Another good question is “How long have you been preparing returns and what courses have you completed?” It’s critical to select a tax advisor with experience or in-field expertise under his or her belt. Tax advisors have a range of backgrounds, so small business owners should ask questions that vet qualifications based on their unique needs.
The tax advisor should also have a Preparer Tax Identification Number, or PTIN. Any person authorized to prepare a tax return for a fee needs to have a PTIN.
“How can you help me lower my tax liability?”
A good tax advisor can offer tax planning year-round and work to minimize a small business’ tax obligation by staying abreast of its financials throughout the year. They can help determine whether it would be advantageous tax-wise to accelerate or defer income and expenses as well as explain how business income impacts eligibility for personal deductions and credits.
Also, small business owners should be suspicious if a tax advisor says they can get a bigger refund than what they have the right to claim. Refund estimates should be based on deductions and credits taxpayers are legally permitted to claim. The IRS can audit returns and assess steep accuracy-related penalties for negligence and substantial understatement. Taxpayers can use an online calculator to estimate their refund as a starting point in their search for the right tax professional.
“What happens if there is a mistake or a client gets audited?”
Taxpayers should understand what happens if an error is made on their return. Will the preparer pay the resulting penalties and interest or will the taxpayer be left footing the bill? A reputable tax professional will guarantee their work.
While every individual fears an audit after filing a return, small business owners are more likely to be audited than nonbusiness filers. They need to ask how the tax advisor handles audits. Will the advisor represent their case to the IRS?
A little research into the best tax professional now can prevent significant financial and legal harm later.
“When are you available?”
Availability is important. Small business owners should ask: “What is your typical response time in the midst of tax season?” They may have a question that needs prompt attention and should find a tax advisor who is available and quick to respond, even at their busiest time.
Another question to ask is: “What is your availability year-round?” Even after taxes are filed, the IRS may need more information about the tax return, so the advisor should be available. On top of this, tax strategy is just one piece of the small business owner’s overall financial picture, so it’s important to find an advisor who meets their year-round needs.
All in all, finding a quality tax advisor can be tricky. These questions will help small business owners do their due diligence to find the right tax advisor they can trust.
Taxpayers who run or are starting a small business have some added certainty around tax benefits and planning due to permanent PATH Act changes.
Whether you’re a small or big taxpayer, these tips will help you know what to look out for when it comes to taxes.
one of the things that most impacts a tax return is the taxpayer's occupation and work arrangement.