Should You Hire a Tax Professional?

Whether you're an individual or a small business owner, there are many times and situations when you should hire a tax professional.

Here are a few examples of when you should hire a tax preparer:

* If you have a complicated tax situation - including business income, investments, real estate transactions, etc.

* If you value your time! Preparing a tax return can take 10-40 hours depending on how complicated your taxes are. If you are a small business owner, your time should definitely be valuable enough to hire a tax professional.

* If you don't have time to keep up with the tax laws. The tax laws are constantly changing, so you need to keep up with them in order to make sure that you get all of the deductions, credits and other benefits you are entitled to.

The biggest reason people hesitate to hire a tax professional is the cost. A good tax preparer is worth far more than the cost of hiring a professional, especially if they can save you more in taxes than he/she charges.

Here are five benefits of working with a tax pro:

1. They can save you more money than you would pay in taxes simply because they know more about the tax law. They stay up-to-date on all of the tax law changes and know all the tax breaks that apply to your small business.

2. A tax pro can save you time. A small business tax return can take 30-40 hours worth of work. Even if your time was only worth $10 per hour, it would still be worth it to use that time for income producing activities.

3. Small business taxes are complicated and may have legal considerations that need to be followed. Having a professional review these items can provide a "peace of mind" factor that's valuable to all small business owners.

4. Many tax professionals provide audit assistance in the event that you are ever audited. They can also help you respond to IRS letters, which can be terrifying the first time you receive one!

5. Tax professionals can help you avoid common tax filing mistakes, which can lead to interest, penalties and additional taxes owed.

You've decided that your tax situation is difficult enough (or your time is valuable enough) that you want to hire a tax professional to prepare your taxes this year. But how do you know which tax pro is right for you?

You want to find an experienced tax preparer who understands your unique situation. Asking for referrals from friends, family or colleagues who have similar tax situations is always a good idea, but you should do your own homework too.

Interview several tax professionals to make sure you find the right tax pro for you. Here are some questions you should ask when interviewing a tax preparer:

1. How long have you been preparing taxes?
2. What licenses, experience or other credentials do you have?
3. Do you specialize in any areas?
4. If you have a small business, you should ask the potential tax professional if they are familiar with your type of business, or if they have other clients who are in the same business you are in.
5. Are you available throughout the year if I have questions or need to do any tax planning?
6. What are your fees?
7. Do you prepare my return yourself, or do you outsource it to someone else?
8. How long will it take to prepare my return?
9. Can you help me if I get an IRS notice or if I am audited?
10. Do you do tax planning and tax estimates, or do you just prepare taxes?

The point is to find a tax professional who understands your unique situation and who will be available to provide help throughout the year instead of only at tax time.