When you first start a business, you can often save time and money by filing your own year-end tax return. But as the business grows, there comes a time when it makes more sense to use a professional tax preparation or accounting services firm. If you’re wondering about the best way to file your taxes, the following questions can help guide your decision:
Do I have the knowledge and experience?
Even with today’s sophisticated software programs, it requires a good working knowledge of accounting to properly file your end of year tax return. Otherwise, you could miss out on deductions, overpay your taxes, or run the risk of IRS penalties due to underpayment. Unless you have a strong background in accounting, hiring the best tax professionals is the safer option.
Do I have the time?
If you’re starting to ask, “Should I do my own taxes?” it could be a sign that you no longer have the time for this lengthy year-end task. As a business owner, your time is your most valuable asset. Every hour you spend managing the books and preparing your taxes is one less hour you can devote to your customers and your business.
Is my business at risk of being audited?
The IRS will audit a business for many different reasons. These can include reporting a net loss in two out of five years, a history of late tax payments, and more. If you think you might get audited, you need the best tax professionals on your side.
Have there been a lot of changes in my business?
A growing business requires more complex accounting and tax preparation processes. For example, if you have added new products, hired more employees, or taken out a working capital loan, your bookkeeping has invariably become more complex. It also means you have more accounting issues to manage and more complicated tax returns.
Does it cost more to do my own taxes?
Professional tax preparation services may seem expensive, but they often cost less than filing your own taxes. To understand how this can occur, assign a cost per hour for your time. Then add up all the hours it takes to prepare your taxes and multiply that by your hourly rate. By itself, this number is often higher than paying an accounting services firm to prepare your taxes. Add in the deductions an experienced San Diego accounting expert is likely to find, and the savings can quickly add up.
Most importantly, an outsourced accounting services firm like BOSS is there for you throughout the year, keeping your books in order and offering advice on how to minimize your taxes and stay compliant with IRS regulations.