Article Contributed by Dominique Molina
Small business owners know that, especially during those first few years you’re in business, it’s important to save money where you can. Many tasks – from sweeping the floors to keeping the books – fall squarely in your lap. The savings realized by not hiring a janitor or a bookkeeper then go into growing your business, with the ultimate goal of being able to afford to hire someone to do those things for you.
When it comes to taxes, however, the savings isn’t as cut and dried. Yes, it will cost you to have someone do your taxes, but in many cases the additional tax savings will more than pay for it.
Here are some reasons why you should seriously consider hiring someone to do your taxes:
- Your business includes large amounts of equipment or inventory. If you’re a consultant who works from home and doesn’t have to deal with specialized equipment, maintain an inventory, or worry about other capital expenses, you might not need someone to do your taxes. However, each of these expenditures has significant tax implications. The difference in how you treat these expenses can mean literally thousands of dollars of difference in your tax bill. Paying an expert to make sure those expenditures are optimized for tax purposes will pay for itself.
- You have employees. The moment you hire someone as an employee, your tax situation can change dramatically. You have certain obligations you need to meet, including things such as payroll taxes. You need to make sure those things are handled correctly. Your tax expert or accountant can help you with that process when you first start to hire employees, and then again at tax time. If you primarily use contract labor, however, the situation can be much simpler and may not require that kind of expertise.
- You sell retail goods. The moment you sell retail goods, you’re required to start collecting sales tax. Sales tax collecting and reporting can be a significant task, and if you mess it up you can face significant fines and penalties. Trust a tax professional to handle your sales tax function.
- You operate in a highly regulated field. Some small businesses have to deal with more government oversight than others. If your business falls into that category, chances are pretty good that there are some tax implications, as well. A tax expert can help you make sure you’re meeting all of your reporting and compliance requirements.
- You want to plan your tax strategy. Unfortunately, most small businesses don’t treat their tax situation in a proactive manner. They simply file their taxes each year, and then forget about them until the following year. This is a mistake. By developing a solid tax strategy, you can save hundreds or thousands of dollars each year in your tax burden. A tax expert can help you map out those important business decisions ahead of time.
- You’re unsure about what can and can’t be deducted when you work from home. A home office can be a tremendous asset in terms of your tax situation, but there are very stringent rules about what is and isn’t deductible about a home office. The same goes for using a personal vehicle for business purposes. A tax professional can help identify those items that are eligible for deduction, tell you what you need in the form of documentation, and help you avoid making deduction errors that could result in significant fines.
- Your business could benefit from financial advice. Many tax preparers are also skilled accountants. They can help you examine your business on a regular basis to make sure that you’re in the best tax situation, of course. But they can also help you to analyze various components of your business so that you identify where there are opportunities for improvement or increased efficiency. An accountant who’s an expert at analyzing business data will save you money both in taxes and in your day-to-day operations.
Many small business owners are quite capable of doing their own taxes. This is especially true of service-based businesses, where there’s not a whole lot going on in terms of complexity. That said, most small businesses can realize at least some savings by hiring someone to do your taxes. It’s simply a matter of finding a tax professional to work with that you trust, that’s experienced dealing with businesses like yours, and who fully understands the trends and changes to the small business tax landscape.
About the Author
Dominique Molina is President of the American Institute of Certified Tax Coaches, an organization of tax professionals who are trained to help their clients rescue thousands of dollars in wasted tax and is a registered educator with the National Association of State Boards of Accountancy (NASBA). In addition to her blogging and speaking engagements, Dominique also provides engagement letter, accounting marketing and a range of accounting templates to her clients.