As a small business, is it better to save money and do my taxes myself or hire a professional?
This is my first year owning my own business. I've always done my own personal taxes but I have no experience filing taxes as an owner to a new business. We have hired several employees that I have to submit W-2 forms for. Am I better off doing this myself to save money or should I skip the hassle and make sure it's done right by hiring a professional?
I would always do taxes with a professional, even a place like HR Block as they take the fall if the taxes are messed up. If you get audited, it's easier to know that your i's are dotted and t's crossed. It's actually not that expensive for the piece of mind it gives you. A few hundred can save your butt :) I've gone to HR block since moving here 5 years ago and my taxes are always done correctly and I don't have to worry about it.
If you have employees as well, it's a nightmare to figure out (at least for this Canadian, learning the US tax system). Better safe than sorry! The IRS doesn't mess around (gulp).
Once I get them done (in just an hour or so), I can carry on and put my attention on other things - easy peasy (and less grey hairs!) :) xo
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As many have already said, the answer depends on your business structure, size, and the complexity of your business. With that said, keeping up with tax structure and tracking your business expenses is a year-round process, not just something that should be prepared once a year. If you've been able to stay on top of bookkeeping every month, filing taxes yourself may be an option.
However, the fact that you have several employees will likely make the process more complicated. To avoid mistakes, you have the option of using a third-party tax service or hiring a tax professional.
To know for sure what option is best for your business, check out this tax guide Business.com put together: Is It Time to Hire a CPA?
This guide will help you determine what bucket your business falls into based on the amount of time and money you have available to spend on preparing taxes this season.
Many small scale business owners decide that they want to manage their own, mainly because they believe it would decrease the costs. However, it has been seen that when a small scale business owner hire professional, more gains can be enjoyed.
Accounting helps you keep a track of your transactions. Maintaining accurate books of accounts is crucial to your business as it helps you make important business decisions. There are some mistakes that business owners need to avoid when hiring an accountant, whether hiring an in house accountant or hiring or choosing an accounting services firm, like Rayvat Accounting.
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Hey, Corey. Great question.
For me, it was immensely valuable to sit with a tax professional and fully dive into what exactly you are taxed on, depending on the business entity, state, etc. I was hesitant to spend the money but it saves you so much stress in the future. And you come out of it knowing a lot more than you did.
So I would hire a professional. Hopefully your budget is not too tight!
Hire a professional! Let them do their job. You should focus on other important aspects of business rather than managing taxes.
I had the same question about my small business, and asked my dad, who's run an accounting firm for decades. His answer (more or less) was: "Most people don't understand how many options there are with taxes. Even the simplest person or business can file at least 16 different ways, but they don't know what they're missing until they talk to us. In other words, people end up saving far more by working with us than by just doing their own taxes."
In other words, it's probably better hire a professional.
I don't have a dog in this fight, just another small business owner, but keep good records and let a professional do your business and personal taxes. Learn enough about the tax forms so your information is easily extracted by the tax accountant, that keeps the costs down.
It is better to hire professional. Sometimes we lose more money in the process of saving some money.
Depends how you value your time and whether you know all the tax concessions for small business.
I develop and present financial programs for multinationals and small business. But when it comes to tax I hire the professionals
Hi Corey, Suggest you initially hire an expert so that you get familiar with the structure and period. This will help you focus more on your company and its growth, rather than getting tied up with legal procedures and compliances.
try to find someone to help you with that who is amongside your friends, who works in finances, and offer him a beer, or so ;)
Unless you have studied accounting, why would you. In addition to the time required, as many others have said, you run the risk of making mistakes which could cost you more than the fees you would pay an accountant.
Many people talk about finding a "good" accountant. Given that every accountant who is legally allowed to ply their trade, every accountant for small businesses has the same qualifications/accreditations. You also can't differentiate between accountants on the basis of the amount of experience they have: just because someone has 20 years' experience doesn't mean they are any better than someone with two years' experience.
Therefore, use references from other small business owners you know and respect to guide your choice.
I find myself in a similar situation. My solution, as advised by a close personal friend who is an accountant, was to research several tax packages and companies such as Turbo Tax, Kiplingers, etc,.. Both have several different tax packages available for purchase at reasonable prices and all come with detail step by step instructions. At the conclusion of the taxes and prior to E-File they review all your inputs for any errors. It has served me very well for the last four years.....no audits by the IRS....not to mention saved me the expense of paying a Tax Accountant..
You actually have two challenges as a small business, preparing the tax filing, and doing the books. I would work with a proper CPA and book keeper for both. A decent one will probably cost you $1000 to prepare taxes, and book keeper will cost around $500 to $1000 a month. However, you can do most of the book keeping yourself if you keep good records of your expenses and revenue.
I was in your position at one time! Having always done my personal taxes, I attempted to do our business taxes myself the first year. I realized very quickly that something was amiss. We took them to a local accountant and I was so thankful we did! There is so much more to be considered, even with a small, home-based business. Trust me, it is worth the added expense (which was considerably less than the refunds we ended up getting each year!) We no longer have our home business, so this year I am back to doing my own taxes.
If you are not a mechanic - would you repair the brakes on your car?
Use a professional!
There are some very good tax software programs available to help you do business taxes - I use Turbo Tax for business. I would try using one of those and then pull together all your questions for a strategic tax accountant to help advise you on the best way to handle your business to maximize your profits. So much of doing tax returns is data entry where there is low value in the service. It is important to get good tax advice however. I have found that to be a better use of my funds.
Hi Corey, Congratulations on becoming a business owner! Now, my answer to your question is this.......Unless you have a sound understanding of the complex tax codes, as applicable to both personal and corporate taxes, chances are that you would run the risk of short-changing yourself in the long-run. It's quite simple; if it isn't your domain then hire an expert to handle it for you.
Here's wishing you success this new year and always, Cheers!
Hire someone, it' worth the money AND the peace of mind. Interview a few accountants and bookkeepers who are enrolled agents. You won't be sorry.