August 26, 2018
When you are the sole proprietor of a business, whether large or small, you need to pay extra attention to your taxes and incurring costly penalties for mistakes or inadequate data, is always a possibility if you don’t engage with a tax preparer.
Here is some advice to keep in mind if you’re looking for a professional tax preparer to help keep you on the right side of the IRS:
Don’t neglect your records:
To make life easier for both you and your tax preparer, it’s vital that you keep good records of your expenses and invoices all year round. Neglecting this aspect of your business may be easy, but it will only ever cause you problems in the long run and will make your tax preparers job far harder to do. Not only that, but it could see you missing out on possible deductions and paying out more than you may need to.
Try to get your head round the basic numbers of your business before you meet with your tax professional, at the very least, and that way you will find the entire process less stressful. Without clearly organized receipts and invoices though, both you and your tax professional will struggle, and you may even incur penalties for late or incorrect filing.
Try to learn a little of the lingo:
You do not need to be well versed in the entire tax code, but you should have a basic understanding of such things as why you are a sole proprietorship and not some other type of business, and whether you can deduct on your home or car, to name but a few. For the lingo that you do not understand, ask your chosen tax professional so that you have a better understanding of things and will not get a nasty surprise when it comes to filing.
Don’t be afraid to research tax professionals and check their credentials:
Your business is important to you, and so if you’re going to be allowing someone access to your financial dealings, you want to be certain that they are who they say they are, and that you can trust them.
You can check with the IRS to see if there are any fraudulent claims made against the individual or their business, and the National Association of Enrolled Agents and the American Institute of Certified Public Accountants can help verify the credentials of your potential tax preparer.
Along with the legitimacy of their qualifications and experience, you should also check the way in which they work and ask how they do projections for their clients’ businesses. There is, in fact, nothing to stop you from speaking to their clients to get a better view of how they work and whether they are up to date with all the changes to tax laws.
Does your potential tax preparer answer your questions satisfactorily?
Make sure that you ask your potential tax preparer any questions that you may have, and if they don’t return your questions with any of their own, that could be a warning sign. How will a tax preparer understand your business if they don’t ask you any questions about it? And how well will your relationship function if they don’t ensure that you have fully understood what they are saying to you?
Most importantly, don’t rush into things when looking for a tax preparer for your sole proprietorship. For many, their business is also their life and may even be their sole source of income, so make sure that you feel you can work well with the individual before entering a legally binding relationship with them.
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