Tax consultancy services are available to help businesses deal with property taxes, federal taxes, payroll taxes and more. While most businesses use accounting software or hire certified public accountants to handle these tasks, they’re not ideal solutions. Software can’t always accommodate complicated tax laws and general accountants might not be cost-effective. Tax consultants are often an excellent choice to assist businesses with their tax-filing needs.
Choosing the right business tax consultant is crucial. We’ll examine tax consultant pricing models and share what to consider when working with these valuable financial professionals.
Tax consultant fees
Tax consultant pricing models and costs depend on many factors, including the type of tax consulting your business needs, whether you hire a tax advisor for a single job or as a full-time consultant and how much work is required to process your taxes.
Here’s a look at various tax consultant pricing models and fees:
- Contingent fees: Many tax consultants work with lawyers to handle questions and concerns about tax issues and take legal action on property tax issues when necessary. Many property tax consultants charge contingent fees plus a small standard filing fee to handle issues or complaints. Contingent fees can be up to 40% to 50% of the tax savings.
- Online tax consultant: A tax consultant who works exclusively online can be convenient for businesses and the quickest way to get answers to your tax questions. However, consultants who work exclusively online don’t have direct access to you or your company. Online tax consultants are a cost-saving option if you’re on a budget, saving you anywhere from $25 to $1,200, depending on the amount of contact you have with the consultant.
- Customized consulting: Some tax specialists customize their services to your business. General tax professionals may take the same approach to most situations. However, if you have unique needs or want bespoke services, look for tax consultants who can customize their services to suit your needs. Custom consulting typically costs $2,000 or more per year.
Remember to take your time when choosing a tax consultant and only hire someone you’re comfortable with. If you need help with taxes for a specialized business, find tax consultants with a background or special interest in your line of work.
Self-employed individuals have unique tax concerns. According to the IRS, the self-employment tax accounts for 15.3% of your gross income — 12.4 percent for Social Security tax and 2.9 percent for Medicare tax.
Benefits of using a tax consultant
Some businesses will benefit from using a tax consultant to advise them before investing or if the tax laws related to their industry have recently changed. Other businesses with complex structures may find it helpful to have a tax consultant on retainer. Either way, here are some ways a tax consultant can help:
- Tax consultants can maximize your deductions: If you have an in-house bookkeeper doing your tax preparation or rely on accounting software, consider hiring a tax consultant to review your returns before filing. This person will be up to date on the latest tax laws and regulations and may be able to identify missed deductions or offer tax-saving tips.
- Tax consultants reduce filing errors: A competent tax professional will spot errors quickly in computation or areas where the tax preparer has made mistakes. They’ll fix these errors before filing, helping you avoid penalties from the IRS. Tax consultants can also review prior years’ tax returns.
- Tax consultants bring peace of mind if you’re audited: A tax consultant can advise you and use their expertise to explain your choices if your company is at risk of being audited by the IRS. They have expertise dealing with the IRS and a thorough knowledge of tax law, so they’re better positioned to help you avoid a tax audit or defend you during an audit.
- Tax consultants offer advice to help you make strategic choices: Decisions about ownership, investment and compensation have positive and negative tax consequences. A tax consultant will share their knowledge and expertise and offer advice so you can make choices with the least tax liability.
- Tax consultants help you prepare for the future: Tax consultants will advise you about pending and proposed tax legislation so that you can develop contingency plans. You won’t be blindsided when new regulations appear.
- Tax consultants keep your tax records in good shape: The IRS requires companies to keep specific records, receipts and other paperwork for years. Tax consultants can organize these documents, so it’s easy to find specific information and stay ready in case of an audit.
Using the best accounting software throughout the year to stay on top of expenses and deductions can help ensure a smoother tax season whether or not you employ a tax consultant.
Things to consider before choosing a tax consultant
If you’ve decided it’s time to find a tax consultant, you’ll want someone who can avoid potential problems with the IRS, save you money and provide you with valuable information for your business. Tax consultants are more than “numbers people.” A good consultant will understand what those numbers mean for your business and communicate this information to you.
As you interview potential tax consultants, consider asking the following questions to ensure you select the best professional for your business.
1. Do they have expertise with other clients in areas relevant to you?
Ensure your tax consultant understands your business type and industry. For example, if you own a restaurant, you have specific restaurant accounting issues and must deal with rules regarding tips and wages. If you own a construction company, you must deal with subcontracting issues.
Find a tax consultant who has worked with other businesses like yours and knows about the ins and outs of your industry.
2. How many years of tax experience do they have?
Regardless of their years of experience, most tax consultants have basic knowledge in the field. However, choosing a tax consultant with several years of experience in an established firm is usually best. Comprehensive experience demonstrates that they have a wider breadth of training and generally greater knowledge of handling business taxes.
3. Will they represent you if you’re audited?
A professional tax consultant should be willing to stand by their recommendations and work if you’re audited. If a consultant you’re considering is reluctant to engage or say they’d represent you in these cases, it’s probably best to move on to another candidate.
4. Will more than one consultant be handling your business?
When you work with a large tax consultancy firm, there’s a chance more than one person will work on items relating to your business. It’s crucial to ask who your point of contact will be and ensure you’re comfortable with the person who will be advising you. If more than one person will work on your business’s tax concerns, ensure you’ll always be assigned to a knowledgeable professional well-versed in your specific business type and industry.
Small business owners must think about taxes year-round to stay prepared for tax season, avoid falling behind on taxes and tackle tax complexities more effectively.
Tax consultants can be a wise business investment
Small tax mistakes can lead to big headaches for small business owners. Hiring a reputable tax consultant can save time and help you avoid costly fines. You won’t have to stay on top of changing tax regulations and complicated tax codes, and you’ll receive valuable advice to safeguard the future of your business.
The money you pay for a tax consultancy will vary according to your needs, business, location and industry. However, it’s a worthwhile investment in your company’s future.