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What To Ask When Choosing a Tax Advisor
“What’s Your Tax Background?”
First, define a tax preparer’s credibility by asking for professional credentials and background. Experience is key when it comes to taxes and year-round accounting services.
CERTIFICATIONS ARE CRITICAL WHEN IT COMES TO TAX AND ACCOUNTING. IT’S ALL ABOUT ACRONYMS:
CPA: A certified public accountant, or CPA, is certified to act as a public accountant. A CPA is the only licensed qualification in accounting and is granted after you pass an exam. CPAs can practice in other areas of accountancy besides taxes, too.
EA: An enrolled agent (EA), the highest credential awarded by the IRS, is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals. Only enrolled agents, attorneys, and CPAs may represent taxpayers before the IRS.
“How Do You Charge Clients?”
Accountants and tax preparers can charge in a variety of ways: by the hour, by the return, by the complexity of forms filed, or even a percentage of the total amount of your refund (a practice that is frowned upon). And with cloud-based accounting, you may have an upcharge to use the platform. While you might not get a hard number of the amount you will owe, establish the context of cost so you are not surprised down the road.
“How Do You File Taxes?”
Most individuals prefer e-filing a tax return, yet many tax preparers will mail them. Define the filing method they use with clients. (Generally, a paid tax preparer who files 11 or more tax returns is required to electronically file.)
Availability is important – not only within the working day, but also year round.
First ask: “What is your typical response time?” (Even in the heat of tax season.) Point blank: you may have a question that needs prompt attention, so choose an advisor who is available and quick to respond – preferably within 48-hours.
Then ask: “What is your availability year-round?” Even after taxes are filed, the IRS may need more information about your tax return, so the preparer should be available to you. On top of this, your taxes are just one part of your overall tax and financial picture, so it’s important to find an advisor who suits your needs throughout the year.
How to Choose a Tax Preparer for Truckers
Think – Who did your income taxes last year? Did they give you good service? Were you happy with the result? Did they even KNOW trucker taxes? Over a year ago, the TruckingOffice team made a commitment to go beyond simply providing the very best bookkeeping and record keeping services available. We began a search for the very best in other important services that all professional drivers need, like factoring, insurance and tax services.
The questions we asked ourselves in our search are the same ones that you should ask yourself if you happen to be searching for a new preparer:
Do they give prompt, attentive service?
Do they know trucker taxes inside and out?
Do they provide a great value for the fees charged?
Have they been around basically forever? Do they have a track record? Have they proven themselves?
And finally, are they fun and pleasant to deal with?
If filing your taxes is about as fun as a trip to the dentist, or if you answered “No” to even one of the questions above when you checked out another tax service,
Questions to Ask a Tax Preparer
When interviewing a prospective tax preparer, ask these questions:
Do you have an IRS issued Preparer Tax Identification Number (PTIN)?
Do you offer a free initial consultation?
How do you keep up with the latest tax law?
Do you regularly take continuing education courses?
Are you a member of any professional tax or accounting organizations?
What are your professional credentials?
Do you abide by a code of ethics?
How do you determine your fee to prepare my return(s)? Is it a fixed fee or an hourly rate? Is it based on a % of my refund?
Who will prepare my return? Will it be you or someone else in your office?
If you have employees who will work on my return, do they hold any credentials and do they take continuing education courses?
When do you require payment?
When can I expect to receive my completed tax returns back from you?
How long have you been in business?
Are you bonded or insured?
Do you outsource any tax preparation services?
What happens if I get audited?
Will you store my tax information? How will it be stored and for how long?
Can I contact you after tax season if needed regarding my return?
Enrolled Agents (EA) – People with this credential are licensed by the IRS and specifically trained in federal tax planning, preparation and representation. Enrolled agents hold the most expansive license IRS grants and must pass a suitability check, as well as a three-part exam. They complete 72 hours of continuing education every 3 years
Certified Public Accountants (CPA) – People with this credential are licensed by state boards of accountancy and have passed the CPA exam. They must meet education, experience, and good character requirements established by their boards of accountancy and comply with ethical requirements as well as complete continuing education to maintain an active license. CPAs can offer a range of services; some CPAs specialize in tax preparation and planning.
Attorneys – People with this credential are licensed by state courts or their designees, such as the state bar. Generally, requirements include completion of a degree in law, passage of an ethics and bar exam and on-going continuing education. Attorneys can offer a range of services; some attorneys specialize in tax preparation and planning
How to become a professional tax preparer
Create your PTIN
Anyone who prepares tax returns and charges a fee for their services is required to have a Preparer Tax Identification Number (PTIN) . There aren’t any educational requirements to get your PTIN. You can create one online on the IRS website. The process only takes about 15 minutes
Apply for an EFIN
If you plan to file tax returns electronically, the IRS requires that you have an Electronic Filing Identification Number or EFIN . You can complete your application quickly on the IRS website, here. You will also need to provide your fingerprints to the IRS unless you are already a certified licensed professional, like a CPA or attorney. It should take about 45 days to get your EFIN.
Register with your state
Every state is different. Depending on where you plan to work, you may or may not need to register as a tax preparer. Look up your state’s requirements before you begin accepting clients.
Work at an office
When you are just starting out as a tax preparer, you may find it helpful to work for an established tax prep service for a brief period. Not only will you be able to ask questions and gain experience during tax season, but you could also learn valuable lessons about the state and local requirements where you plan to start your business.
Choose a tax prep software
Every tax preparer is different. Depending on your level of experience in the industry, you may require certain things from your tax preparation software. Consider your needs first.
HOW TO CHOOSE THE RIGHT TAX PROFESSIONAL FOR YOU
How do you choose a professional?
For anything, really?
When you need legal or medical advice, an electrician, or a mechanic?
Do you take the phone book and choose a random entry?
Do you drive around stopping at the first place you find?
No. You shop around. You ask friends, family, and coworkers for recommendations. Never do you go in blindly. But most importantly, you ask questions! So why would you choose just anyone to hire to prepare your tax return? Why would you use a chain tax service where you don’t know a single thing about the person who will prepare your tax return? Many people already have a tax preparer they trust and have been working with for years.
You are the boss in this scenario, and the professional is working for you. You need to be the one who makes the decision to hire a particular person to prepare your income tax return.
You’ll even hear about a “friend of a friend” whose sister used this guy out of a back room without windows who got them a huge refund when they should have gotten peanuts.
Sadly, it’s hard to tell who is qualified, who is for real, who should be trusted with your income taxes. There isn’t a perfect way to find out about a person or company other than to ask around or check out reviews online.
Tips to Choose an Accountant for Your Small Business
Irrespective of the industry your small business falls into, you cannot understate the value of a good accountant. You can get a bookkeeper for basic accounting services, an accountant who has a degree in accounting for more complicated accounting and payroll services, or a certified public accountant who can help with tax planning and also prepare taxes. All of these people can share strategic advice for business growth.
Know What You Need
But before you choose an accountant, you need first to understand the kind of work or responsibilities you want the accountant to handle for your business. If you need monthly financial statements and bookkeeping tasks, a non-certified accountant or bookkeeper can be hired. But to get tax planning advice, tax returns prepared, or audited financial statements, you need a CPA or certified public accountant.
Look For Small Business Experience
Beware of big accounting firms. You need someone who works with small businesses, and it could also be a bonus if the accountant works with businesses in your industry. While working for clients from a specific industry for a long time, some accountants get to know the related challenges very well. If the accountant has been dealing with several clients like you, he/she can guide you well about making the right financial decisions for the growth of your company.
Decide Whether You Need an Accountant or a CPA Firm
Many small business owners start by managing their taxes on their own. Unlike the past, it has become much easier for business owners to do simple bookkeeping tasks with the help of advanced software like QuickBooks, Xero, Sage, and similar others.
Ask for Recommendations
One way to find an accountant for your business is to ask other business owners about whom they use. Nothing is better than a recommendation from one of your peers. Ask about their experience of working with their accountant or bookkeeper, and get some idea of the budget you’ll need to have to pay for these services
How to choose an accountant for your small business
Picking the right accountant is a vital business decision, so you’ll need to arm yourself with the right assessment questions. Charlotte Simmonds hears the experts’ views on what these should be
Choosing the right accountant is one of the most important decisions a small business can make. A good one can save you time and help your business grow; a bad one could cost you much needed money. Yet with thousands to choose from, it can be a daunting call to make. So when it comes to selecting and working with an accountant, what are the questions every small business owner should ask so as to make the most informed choice?
Why should I hire you?
Hiring an accountant can be “even more important” than taking on a member of staff, says Clive Lewis, head of enterprise at The Institute of Chartered Accountants in England and Wales (ICAEW). “If you get the wrong person, you can miss out on things you should know,” he explains, “and that can be very costly.”
Charlotte Chung, senior policy advisor at the Association of Chartered Certified Accountants (ACCA), says the key thing to query during the hiring process is how the accountant will add financial value to your company. “Look for someone who can act as a business partner. You want them to demonstrate the skills and knowledge of supporting a small business.”
Therefore, take your time with research. Both Chung and Lewis advise meeting with a least three candidates before making a final choice. There are a few fundamental questions that must be asked during these meetings
How to Choose an Accountant Who Is Also an Advisor
Accountants help you keep an eye on major costs as early as the startup stage, a time when you’re probably preoccupied with counting every paper clip and postage stamp. Accountants help you look at the big picture.
In fact, perhaps no other business relationship has such potential to pay off. Nowadays, accountants are more than just bean counters. A good accountant can be your company’s financial partner for life — with intimate knowledge of everything from how you’re going to finance your next forklift to how you’re going to finance your daughter’s college education.
These four disciplines often overlap. For instance, if your accountant is helping you prepare the financial statements you need for a loan, and he or she gives you some insights into how certain estimates could be recalculated to get a more favorable review, the accountant is crossing the line from auditing into business advisory services.
Most accounting firms offer tax and auditing services. But what about bookkeeping? Management consulting? Estate planning? Will the accountant help you design and implement financial information systems? Other services a CPA may offer include analyzing transactions for loans and financing; preparing, auditing, reviewing and compiling financial statements; managing investments; and representing you before tax authorities.
Is the accountant’s style compatible with yours? Be sure the people you are meeting with are the same ones who will be handling your business. At many accounting firms, some partners handle sales and new business, then pass the actual account work on to others.
Questions to Ask When You Choose a Tax Accountant
If you are considering early exercising of a significant number of options or are thinking about selling options in the public market for the first time we highly recommend retaining a reputable tax accountant. We realize this means you will incur a fee, but it is highly justified given the risk you take on incurring significant unforeseen taxes if you don’t consult a great tax accountant. It is not as easy to quantify the savings from hiring a tax accountant as it is from hiring an estate planner (see our recent post by Abe Zuckerman regarding Estate Planners), but it’s just as necessary. Like most people, you’re probably not sure how to choose a tax accountant.
Do they have expertise in areas relevant to you?
If you work for a technology company that issues stock options or RSUs, then make sure your accountant has worked with plenty of other clients in the same situation. Better yet, make sure she has clients who work in more senior positions than you because with seniority usually comes more complexity. A true professional will tell you if she is not appropriate for the job, either because your return is too simple to warrant her help or too complex due to her lack of relevant experience (a common example where a lot of experience is needed would be the area of oil and gas partnerships)
How many years of individual tax experience do they have?
An appropriate tax advisor should have a minimum of five years experience doing individual tax returns. Experience with a large firm is usually better than a small firm because she will have been exposed to a broader set of issues and her training should be better
What license(s) do they have?
It would be preferable for your tax preparer to have a CPA (Certified Public Accountant license) although it is not technically required. Tax Attorneys should have a LL.M in Tax (an advanced tax degree for an attorney).
Do they have an advanced degree?
A CPA can do tax work even if she hasn’t had any special training in tax. I know that sounds crazy. That’s why it might make sense to look for someone with more advanced training like a tax specialty within an MBA. My tax advisor, Bob Guenley (who has written a number of guest posts for us), told me he only took one tax course in college and learned a lot on the job, but getting his MBA in tax made a whole world of difference. His MBA included individual, partnership, corporate and fiduciary tax, which is more than one needs if she wants to specialize in individual tax, but it’s awfully nice to have someone advise you who has that broad perspective. An advanced degree isn’t necessary if your accountant has taken advanced classes in personal tax as part of her ongoing Continuing Professional Education requirement. There is no correct answer to this question. I just think your tax advisor/preparer needs to have taken several courses emphasizing personal taxes.
Choosing an accountant
When choosing an accountant, look for one that will suit you or your business. Some accountants specialise in tax returns for individuals or for businesses in a particular industry, and others are experts in a particular area of tax.
If you’re an employee
An accountant can be useful if you have multiple jobs or income from investments. They can also help you claim all the tax deductions you’re entitled to and make sure your tax return is correct.
If you work for yourself
If you work for yourself as a sole trader, contractor or freelancer, an accountant can help.
Help with your business
If you run your own business, an accountant can help you set up and maintain your financial records. They can also help you meet your tax obligations.
Finding the right accountant
A good place to start looking for an accountant is recommendations from people you know