Preparing taxes isn’t always a fun thing to do, and this is especially true for startup founders or small business owners who choose to do their own taxes. If they take care of sales, and marketing, as well as manage a small team, doing taxes will surely feel like an added burden.
Although many find filing taxes an unpleasant process, you’ll be surprised that millions of business owners continue to do without a tax professional helping them come tax time. Probably they try to save a couple of dollars than pay for the CPA cost to prepare taxes. However, what they don’t realize is that they could be missing a lot of opportunities when it comes to savings on tax deductions and also their time.
If you’re thinking about how much a CPA cost to prepare taxes and what are the advantages of working with a tax expert, then continue reading.
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Can you do your own business taxes?
Filing taxes isn’t for everyone, but with dozens of YouTube video tutorials and blogs, you may think that DIY tax prep is possible. Well, technically speaking, yes, you can prepare your business’ tax returns yourself. The IRS does not require business owners to hire a professional to do their tax returns.
Besides savings costs, another benefit of doing your own taxes is that you will have a better understanding of tax laws and how they can affect your bottom line. You’ll get a better grasp of what type of expenses you can claim against your taxes, which can help you when you file your future tax returns.
Ideally, you can file your own taxes when you’re only claiming a standard deduction. You must keep in mind, however, that you have to understand your business structure as this will determine how you file.
Sure, you may be aware that you own an LLC, but do you know if your business is a partnership, or are you a single member? If you are a sole proprietor, you should use Schedule C (Form 1040).
In addition, if your business earns $73,000 and below, you’ll be qualified to file your taxes for free. Besides using free filing options on the IRS website, you may also opt to use some tax preparation software like TurboTax, TaxAct, and E-file.com, but of course, these will come with a fee, and you’ll still have to spend time preparing and filing your taxes yourself.
So in deciding if you’re taking the DIY method instead of hiring a professional, you should consider these two things: 1. how complex (or simple) your tax situation is and 2. if you’re knowledgeable about the proper process of filing your taxes. You also have to take into consideration the recent tax changes and tax laws that can affect how you prepare your returns.
You have to make sure that your tax forms are error-free as this may raise a red flag with the IRS and lead to costly penalties.
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Some common mistakes on DIY business tax returns are:
- Using the wrong form
- Late filing/missing the due date
- Failing to submit proper supporting documents
- Entering the wrong information
- Mistakes in making payments
- Personal and business expenses are not separated
- Poor recordkeeping
When should I get help with preparing taxes?
To help you easily decide if it’s time for you to hire a tax professional, answer the following questions:
- Do you have a complicated tax situation?
- Do you own a business where you have various expenses to deduct?
- Do you plan to itemize your deductions?
- Are there major changes in your business from the previous year that can impact your tax filing?
If you answered “yes” to one of these questions, then you can surely benefit from hiring a tax expert, like a CPA.
How can CPAs help you during tax time?
Working with a CPA during tax time has a lot of benefits. These professionals can help you prepare your business tax documents, file returns, and help strategize ways how you can maximize your tax deductions and minimize liabilities. More importantly, CPAs help ensure that your business is compliant with tax regulations and it’s up-to-date with the latest accounting standards. CPAs can also represent your business before the IRS should you undergo auditing.
How much does a CPA cost to prepare taxes?
Based on the 2020-2021 survey report of the National Society of Accountants, the cost of tax preparation fees starts from $220 for a standard deduction and up to $913 for corporate tax returns. Note that these numbers are just an average and factors such as the complexity of your tax situation and the experience of the CPA can affect the actual fees.
Why should I consider hiring a CPA to prepare my business taxes?
While it’s true that the CPA cost for filing taxes is higher compared to doing it on your own, you can definitely get your money’s worth with their expertise.
Here are some reasons why you should consider using working with a CPA for your business tax preparation.
Prevent Tax Filing Issues
Again, you can easily search on Google and find various guides on filing taxes for your business. However, some information from the internet may be outdated or incorrect. And it’s safe to assume that not all business owners are tax law savvy, which means it could be difficult for you to determine whether you’re using accurate information to help you prepare returns for your small business.
Remember, tax laws change, and you could rely on a tax professional to remain updated with these regulations and requirements. Hiring a CPA could prevent issues that may arise from doing taxes on your own. You will also gain peace of mind that your tax returns are professionally taken care of.
Don’t Miss Tax Deductions
Since CPAs are adept with the latest tax codes, you sure can depend on them to help you find ways to maximize tax claims for your business. This means the more taxes you can deduct, the more money you can get on your refund.
One key to a hassle-free tax time is ensuring that you keep the proper records. When you work with a CPA in preparing your taxes, they will most likely provide solutions to help improve recordkeeping for your business. This can optimize tax deductions and also help you better monitor your business expenses.
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Save Time and Energy
Whether you’re claiming a straightforward deduction or filing a more complex return, if you’re using the DIY method, it will surely take a chunk of your time and energy. If you’re a small business owner or a startup founder your priority should be funneling your effort and time in other aspects of the business that generate revenue, and hiring a CPA will allow you to do that.
Get Help Outside of Tax Season
It’s not only during tax time that you can have access to the expertise of a CPA. Besides their experience with tax planning and preparation, you can rely on them to provide you with insights and advice that are based on financial data.
Is the CPA cost to prepare taxes worth it?
The straight answer to this is, definitely. With a CPA helping you with your tax returns, you can save time and avoid unnecessary stress, allowing you to focus on other important matters for your business. You can get your money’s worth because you can maximize tax deductions to reduce your liabilities. You’ll also have peace of mind knowing that you won’t have issues with the IRS.
If you want to know more about how you can benefit from a CPA helping you with your taxes or is also in need of online bookkeeping services, you can reach out to us at miplly, email: [email protected] or send a text message to: (855) 732-0515.