Understanding tax laws can be overwhelming for individuals. But small business owners might find it’s worth the cost of hiring an accountant to do their taxes — and not just because they save time or because there’s so much paperwork that filing on their own would be impossible without help.
There are many good reasons to consider an accountant. There are five reasons in which it might be worth the investment.
01. Accountants can provide more than tax services.
If you’re facing complicated financial decisions, your accountant may be able to give you the answers you need. For example, if a client has a business that is having problems and might have to lay off employees or even close its doors, an accountant can help figure out how best to handle those potential problems.
An accountant can help you understand what is going on with your business, which can be priceless.
02. IRS penalties for errors can be severe
If you are an individual or a small-business owner who makes mistakes when filing your tax return (or if someone in the company does), then you might face some severe consequences. The IRS will charge interest and fees on any late payments, and it will take money out of your refund to cover those costs.
Failing to file a return, filing inaccurate information, or paying too little may also result in costly penalties. An accountant has experience dealing with these issues and professional tax software that helps avoid errors.
03. Businesses have specific tax concerns.
They need to keep track of sales taxes paid, employee withholding amounts, the cost of goods sold, and many other transactions. They may also have questions about specific expenses or deductions, employee salaries, and benefits, international taxes – the list goes on and on. An accountant can determine which tax avenues are best for your business. And while some choices involve an upfront cost, they might save you money in the long run by reducing your tax burden.
04. Accountants specialize in small businesses.
An accountant who works with small businesses isn’t just a jack-of-all-trades—they actually know what is involved in running one. Unfortunately, accountants who work with individuals aren’t going to have that expertise. If you go to the wrong person with these kinds of problems, they might make things worse.
05. Accountants are there for you year-round.
They aren’t just people who show up at tax time and disappear until the following April 15 rolls around. If you need your accountant to answer your questions or provide other services during the year, they will be available (and probably more than willing) to do so. That’s something that you can’t count on if you try to go it alone.
During Tax Time, An Accountant Might Be Able To:
- Help find deductions and credits that reduce taxes
- Find errors on W2 forms or 1099s from previous years
- Determine whether a client should file as an individual or a business
- Evaluate business structures (S corporation, C corporation, sole proprietor)
- Provide valuable financial information necessary for making important decisions
If you’re trying to make financial decisions or find out how your company is doing financially — or if you’re having trouble just understanding what the numbers in your company mean — then an accountant has professional expertise that can be invaluable. For more information about this topic or other tax & accounting services, contact our experts at XOA TAX.