Be Social

Hi there! Welcome to my Free Resources page, where I share all kinds of freebies, templates and guides for creative business owners, artists, and entrepreneurs. If we haven't met yet, hi! I'm Magi. I'm lawyer, educator, photographer, storyteller, traveler, and entrepreneur. My journey has taken her from photographing professional surfers while swimming in some of the world's most epic waves to receiving a Juris Doctorate from Rutgers Law. If I'm not photographing a wedding with my husband, Scott, in a remote locale, managing our team of Associate Photographers, or providing legal counsel to creative business owners, then you can probably find me eating an açai bowl, chasing my pup, Arti, around the beach, or watching SVU reruns in our bungalow. I hope you find these intentionally-crafted resources useful, and if there's anything else I can do for you and your business, please reach out!

Welcome!

Taxes

How To Pick A Virtual Tax Preparer

how to pick a virtual tax preparer

 

Even in normal years, professional tax preparation can save your business time and money. But in the time of COVID-19, it’s especially helpful. As you work to help your business weather the storm, chances are you don’t have time to spend poring over the minutiae of tax code. And government grants and loans only add further complications to your filing.

Another factor comes into play this year: Social distancing. You have the option of hiring a professional and working with them remotely to get your taxes filed. That means no face-to-face interaction—which is a good thing.

Here’s everything you need to know about hiring someone else to do your taxes remotely, from qualifications to look out for to how much you can expect to pay.

 

Why should I hire someone else to do my taxes for me?

If you’re used to filing your own taxes, the first time paying someone to do them for you can be a mental hurdle. While you may find it difficult justifying the expense up front, having a professional file your taxes comes with three major benefits:

  1. Tax services give you the time you need to focus on your business
    • You potentially save yourself hours of work over multiple days by having someone else file your taxes. That’s time you could invest in your customers or clients. Think of it this way: There are thousands, if not millions, of people who are qualified to file your taxes for you. But you’re the only one who can run your business.
  2. Having someone file taxes for you could be cheaper than doing it yourself
    • Price out your time. How many hours per week do you work for yourself, and how much do you earn? Then, look at how many hours it takes you to file your taxes. Multiply those hours by your hourly income. What does it come to? There’s a good chance it’s less expensive to hire a professional than to pay yourself, figuratively speaking, to do taxes.
  3. Tax services help prevent filing errors
    • Small mistakes filing can result in major penalties if they’re caught by the IRS. On top of that, a tax professional may be able to spot expenses, or ways to deduct them, that you would have overlooked. That can save you money in the long term.

What types of tax services are there?

You’ve got a wealth of options when it comes to who files taxes for your business. They can be broken down into the following categories.

Tax preparation by your accountant

  • If you have an accountant already advising your business, they should be equipped to file taxes for you. If you don’t have an accountant, this may be a good time to get one. They can provide support throughout the year—for instance, with sales tax remittance, or quarterly estimated tax payments—while also preparing your year-end taxes.
  • One drawback to hiring an accountant: They may or might not be set up to file virtually; a seasoned local accountant who insists on doing business in person may pose a problem if you’re trying to socially distance.

Tax preparation by your bookkeeping service

  • If you work with a remote bookkeeping service, they may be able to file your taxes for you. The biggest benefit is that they already have access to all your financial records—the information you need to file. So the handoff between day-to-day bookkeeping and end of year taxes is quick and easy.
  • For instance, Bench is the biggest bookkeeping company in America, specializing in small businesses. If you’re already a Bench client, their Bench Tax program seamlessly passes your info on to a team of professional tax filers who handle it for you. They promise to take advantage of every deduction possible. If you’re already using Bench, or thinking about it, this could be your best option.

Tax preparers

  • Besides accountants and remote bookkeepers, there are a variety of professionals who are qualified and able to file your taxes for you. They may offer other services as well—accounting, bookkeeping or financial advising.
  • We cover their different certifications in the next section. At the end of the article, we look at ways you can find and hire these professionals online.

Who can I hire to do my taxes?

Regardless of their title—whether they’re a bookkeeper, tax advisor, accountant, or financial planner—there are only a handful of official, certified roles.

Certified Public Accountants (CPAs)

  • Most typically, your business accountant will be a CPA. But professionals who label themselves otherwise—as tax preparers or tax advisors, for instance—may be qualified CPAs.
  • The educational requirements for becoming a CPA vary state to state, but all CPAs must pass a standardized exam in order to get their titles. Depending on your state, CPAs may or may not be required to pursue continued education—meaning, it’s possible they aren’t up to date on the latest changes in tax code. Make sure to interview any potential CPAs before hiring.

Enrolled Agents (EAs)

  • Many tax preparers and advisors are EAs. To become an EA, they either have to pass a standardized test, proving they know tax code top to bottom; or, they have to work for the IRS for five years in a qualifying position. On top of that, they need to complete 72 hours of continuing education every three years—with a minimum of 16 hours per year. All the courses they’re required to take cover federal tax law.

Accredited Tax Accountants (ATA) and Accredited Tax Preparers (ATP)

  • The ATA designation is offered by the Accreditation Council for Accountancy and Taxation (ACAT). ATAs specialize in helping closely held companies, as well as estates, funds, and highly compensated individuals. In order to become an ATA, a professional must have three tax years’ experience providing tax prep, compliance, planning, and consulting to clients. And 40% of that time needs to be devoted to planning and consulting specifically.
  • Like an ATA, an ATP gets their certification from ACAT. This certification specializes in Form 1040 filings and self-employed income, and requires ongoing education.

Certified Financial Planners (CFP)

  • CFPs help you plan your taxes on a large scale—dealing with savings and investments. Some of them offer tax prep services.

How much does it cost to have my taxes filed?

The cost of filing your taxes will depend on how complicated they are. Constant back and forth with your tax preparer, amending information or changing your mind about tax credits, will cause your bill to climb. But if you have everything in order, including year-end financial reports from your bookkeeper, your bill may be smaller.

The cost may also depend on what kind of business you have. If you’re a sole proprietor, you’ll likely pay less than you would if you were a corporation. According to the National Society of Accountants, the average cost of filing an itemized Form 1040 with a Schedule A in 2018–2019 was $294.

How do I choose a tax filing service?

There are a few factors you need to take into account when choosing your tax preparer.

How they prefer to work

  • If you’re set on doing 100% of your tax prep and filing online, you’d better make sure the person you hire is comfortable with that approach. Not all local tax professionals will be up to the task—so your best bet may be to hire online.
  • Also, if you use accounting software to manage your bookkeeping, it helps to hire a tax professional who’s proficient in the same software. It makes sharing financial documents and other info easier.

Certification level

  • The professional you hire should be able to prove some level of certification and experience. If not, buyer beware—they may not be legit.
  • The precise level of that certification is up to you. Other factors come into play, though: One professional may be a CPA, ATA, and ATP, but only have five years’ professional experience. Another may only have CPA certification, but 20 years’ experience working with businesses in your industry. Pay attention to details like these when choosing who to hire.

Additional services

  • Getting help preparing your taxes may be a stopgap solution to get your business through a hectic tax season and into next year. But it doesn’t have to be: Year-round help from a bookkeeper can help keep your financial records up to date and make end of year tax filing pain free.
  • If a business offers both bookkeeping and tax filing—as Bench does—this could be an opportunity to both file your taxes and start outsourcing your bookkeeping. So you start off on the right foot next year.

How do I know I can trust a tax preparer?

Anyone can call themselves a tax preparer. But not everyone is qualified. Remember, whoever files your taxes has access to sensitive information about your business, and possibly also your personal and family finances. You need to make sure you can trust them before you hire them. 

Here are things to look for when you hire a tax preparer:

  1. A Preparer Tax Identification Number (PTIN)
    • Anyone filing taxes on your behalf has to have PTIN registered with the IRS. If they’re unable to provide a PTIN, they can’t file for you.
  2. Annual Filing Season Program (AFSP) Record of Completion
    • The AFSP, run by the IRS, allows non-credentialed tax preparers to prove their experience filing taxes. They’re required to get 18 hours of continuing education and pass an exam. If you’re thinking about hiring a friend of a friend to file your taxes, and they’re not a CPA, this is a good, minimal level of qualification.
  3. Online filing
    • Anyone filing more than ten tax returns in a year must file online. If your tax preparer is willing—and able—to file by mail, it could be a sign they’re low on experience.
  4. Willingness to sign
    • Any qualified tax preparer should co-sign your tax return. Without a signature, it’s easy for them to commit fraud—for instance, redirecting your tax refund to their own account. Their signature makes them legally liable for the contents of the filing, and it’s absolutely essential.

Where can I find an online tax preparer?

If you’re looking for a tax preparer, here a few good places to get started:

 

Need more advice for how to run your business smoothly? Check out our blog for more free resources!

Leave a Reply

Your email address will not be published. Required fields are marked *