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Seeking Professional Help: When to Consult with a Tax Advisor or Accountant

Seeking Professional Help

As a small business owner, you know your business inside and out. You’re an industry expert. You understand your products and services, your market, and what you need to do to close that next deal. But smart business owners also understand that sometimes they can’t and shouldn’t do it all. That there are certain tasks outside their areas of expertise.

Take tax planning. If you’re not an accountant, managing your taxes can be a giant, stressful, time-consuming headache. Not to mention, doing them incorrectly could lead to penalties, an audit, and perhaps legal issues, plus you could be missing out on some big deductions. Even if you use the best accounting software—which can be incredibly robust and user-friendly—there are several reasons why you may want to consider consulting with a tax advisor or accountant. Let’s explore some of them.

You’re establishing or changing your business entity

How you structure your business will impact your tax obligations, liability protection, and the tax return forms you’ll need to submit. Most business entities are either a sole proprietorship, partnership, corporation, or S corporation. If you’re unsure about which entity you should choose and what you may be liable for with each, a tax advisor or accountant can help you select the most appropriate structure for your situation.

You want to ensure that you’re legally compliant

As rewarding as running a business is, plenty of red tape is involved. From permits to insurance requirements, there are ever-changing laws and regulations you need to be aware of.  And, as you may presume, many of those stringent and evolving laws pertain to taxes and financial recordkeeping. Even if you are in a minimally regulated industry, there are important federal, state, and local tax laws and codes you will need to abide by.

A tax advisor or accountant can help you avoid unwelcome tax-related surprises. While using accounting and invoice software will help with recordkeeping and organization of payments and your sales tax liability, a financial professional can provide expert guidance as you navigate the often complicated tax compliance journey.

You’re in an industry that frequently gets flagged for audits

The IRS considers certain types of small businesses more likely to inadvertently or intentionally claim more deductions than they are entitled to. Some businesses that may be at risk for extra scrutiny and potential audits include those that conduct a lot of cash transactions, such as restaurants, beauty salons, and childcare businesses. Excessive claims for deductions for vehicles, meals, travel, or a home office are also considered red flags that may trigger an audit.

Accounting software with a receipt and expense tracker can help you track your business expenses. But to ensure you’re covering all your bases, it may be wise to consult with a tax advisor or accountant if you’re in one of the frequently flagged sectors. If you’re audited, you’ll undoubtedly need an accountant, so it’s best to be proactive and consult with one before you meet the wrath of the IRS.

You want to maximize tax deductions and credits

No one wants to pay more taxes than they have to. Tax advisors and accountants stay on top of the latest laws to ensure you claim every deduction and tax credit, such as self employed allowable expenses, you qualify for. Laws change constantly, and you don’t want to miss out on dollars that you could be investing in your business.

Your business is growing fast

If you need to scale up quickly or plan to expand your business, hiring an accountant or tax advisor can help you get all your ducks in a row. They can assist you with real estate, sales, and payroll taxes and ensure you comply with all federal, state, and local laws.

If you’re using accounting software, your accountant can evaluate your records, cash flow, and business statements and provide insights into your performance and profit margins. They may be able to identify opportunities for growth, as well as areas where you may need to be a bit more cautious.

You’ve got other things to do

As a small business owner, you’re involved in every aspect of your business, from HR and sales to marketing, customer service, and fulfillment. A tax advisor or accountant can support your business by taking lots of time-consuming tax and financial tasks off your plate so that you focus on your other responsibilities and priorities.

If you use accounting software, accountants and tax advisors can ensure that you’re maximizing your system’s capabilities to make tax time, legal compliance, and financial recordkeeping easier. They are experts in what they do, and you can leverage their experience and knowledge in ways that will pay off significantly in the long run.

Partnering can position you for success.

Whether you’re launching your business or positioning yourself for continued growth, an accountant or tax advisor can partner with you at every stage. Hired as a consultant or full-time team member, they can help manage financial statements, tax returns, and more. As financial pros, they can provide objective insights into your business performance and operations. Accountants and tax advisors can give you added peace of mind so you can confidently make strategic, informed business decisions.

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