Tips to Choose the Right Tax Advisor for Your Business

August 6, 2020

Your business tax return provides valuable insights into your company’s revenue, expenses, and annual growth. It is important that you choose a tax professional knowledgeable in current tax credit opportunities, deductible expenses, and employee taxation reporting. They must ensure your return meets the many requirements dictated by the Internal Revenue Service (IRS).

Below are several factors to consider when hiring a tax advisor.

  1. Find an advisor who is familiar with your particular industry. Depending on your type of business, reporting requirements for things like wages and income can differ greatly. If you offer stock options, be sure the professional you choose has experience with businesses that do so as well.
  2. Look for someone with whom you want to develop a long-term relationship. Finding the right fit for you and your business is key. You will probably want someone who can be an ongoing advisor, rather than one that is only available at tax time. 
  3. Determine which type of advisor best meets your needs. Two types of tax pros to consider include Enrolled Agents (EAs) and Certified Public Accountants (CPAs).

IRS-ENROLLED AGENT
Federally licensed by the IRS, enrolled agents have unlimited rights to represent taxpayers before the IRS for audits, collections, and appeals. An enrolled agent is a tax expert that has passed a rigorous qualification process including three Special Enrollment Examinations, one of which is specific solely to business taxes. IRS-enrolled agents must also complete 16 hours per year of continuing education, two of which focus on ethics. 

CPA
Licensed by the state in which they practice, a Certified Public Accountant (CPA) is qualified to prepare your business taxes, as well as offer a broader range of services including financial planning and investments.

If your business has grown significantly in the last year and you need a plan for the coming months, or need a full audit of your business’ expenses, deductions, and income, a CPA might be better suited than an enrolled agent. However, you should ensure that the CPA is licensed in your state.

  1. Confirm prospective advisors’ credentials. Check out CPAs through your state’s accounting board and online rating websites; or go to CPAverify to confirm their credentials and professionalism. Confirm an enrolled agent’s status with the IRS by submitting a request to their licensing office via email.

 

Finally, interview more than one candidate to compare fees, services, and even personality to find the right fit for you. If the tax advisor is not available to work with you year-round, you might want to keep looking. Any tax professional you hire should offer a guarantee of their services and agree to provide any necessary amendments, revisions, or audit support as needed after the filing season has concluded.

 

Information sourced from:
https://www.thestreet.com/personal-finance/education/tax-advisor-14645141