The tax season is upon us yet again. For many business owners, the question arises: should we DIY our taxes or hire a professional tax preparer? There are benefits and drawbacks to both methods. Let’s take a look at a few key points to help you make your decision.
Who Can DIY Their Taxes?
Generally speaking, if your business is fairly simple and you have a good understanding of the tax code, you can probably get away with doing your own taxes. This is especially true if you’re comfortable with using tax software. However, if your business is more complex—for instance, if you have employees or contractors—it’s probably best to hire a professional. The last thing you want is to make a mistake on your taxes that could end up costing you dearly down the line.
1. Service-based businesses with basic income and expense structures:
If your business primarily provides services and has a straightforward income and expense structure, you can probably file your own taxes. This is because service-based businesses typically don’t have inventory or complex financial transactions to report. As long as you keep good records of your income and expenses throughout the year, you should be able to fill out your tax return without any trouble.
2. New businesses that have minimal income and expenses:
Startups often don’t have much in the way of income or expenses in their first year or two of operation. If this describes your business, you can probably file your own taxes without any problem. The key here is to make sure that you keep track of all your income and expenses so that you can accurately report them on your tax return.
3. Businesses without big fluctuations year to year:
If your business doesn’t see much fluctuation in its income or expenses from one year to the next, you can probably file your own taxes. This is because there won’t be any major changes that you need to account for on your tax return. As long as you keep good records of your income and expenses, you should be able to fill out your tax return without any trouble
Who Should Hire A Tax Preparer?
If your business is complex or you simply don’t have the time or energy to do your taxes yourself, hiring a tax preparer is probably the way to go. A good tax preparer will not only ensure that your taxes are filed correctly and on time, but they can also help you maximize deductions and minimize your tax liability. Just be sure to do your research when hiring a tax preparer—you want someone who is reputable and who has experience dealing with businesses like yours.
1. Businesses With Unusual Expenses
One of the biggest benefits of hiring a tax preparer is having someone who knows the ins and outs of deducting unusual expenses. If your business has any expenses that fall outside the normal course of business, it’s worth talking to a tax preparer to see if they can be deducted. For example, if you have a home-based business, you may be able to deduct a portion of your rent or mortgage as a business expense.
2. Product-Based Businesses or Retail Shops With Inventory
Another type of business that can benefit from hiring a tax preparer is one that deals with inventory, whether it’s a product-based business or a retail shop. If your business has inventory, there are special rules and regulations when it comes to deducting those costs. A tax preparer can help make sure you’re taking all the deductions you’re entitled to and help you avoid any penalties or interest charges.
3. Scaling Businesses That Need Tax Advice
Finally, if your business is growing and you’re starting to bring on new employees, it’s worth talking to a tax preparer about how to best Structure your payroll taxes. They can also advise you on what kind of retirement plan makes the most sense for your business and help you set up payroll deductions for your employees.
There’s no right or wrong answer when it comes to deciding whether to DIY your taxes or hire a professional tax preparer. Ultimately, it depends on factors such as the complexity of your business and how much time and energy you’re willing to invest in preparing your taxes. If you’re not sure what’s best for you, speak with a tax professional to get their opinion. They may be able to provide some insight that you haven’t considered.