This article will help you understand how to choose a tax preparer for your tax returns with the IRS and how to avoid errors that could harm you.
You’ll learn about the benefits, how to select one properly, costs, and more.
Let’s get started.
What is a Tax Preparer?
A tax preparer is someone who delves into your business’s activities and has a deep understanding of it. At the same time, they are specialists in preparing tax returns and have extensive knowledge of tax-related matters, assisting with forms or, in more complex cases, defending against an IRS audit.
Whether you’re audited randomly or due to some inconsistency in your business, you need this person to help you.
Benefits of Choosing a Tax Professional
- You delegate this to a professional: doing this yourself is not feasible unless you’ve trained as a tax preparer. You need certain permissions from the IRS (including a PTIN). Therefore, hiring a tax preparer is almost a requirement for businesses.
- The best help in an audit: if the IRS identifies any inconsistencies in your tax return, this professional will not only help you with the defense but also prevent errors that lead to an audit.
- Great help beyond audits: a tax preparer knows about tax-related matters, so they’ll know how to help you grow your business and make difficult decisions.
Tips for Choosing a Tax Preparer Correctly
1. You should choose a tax preparer with experience in dealing with the IRS.
2. A good tax preparer should have a deep understanding of your business’s activities. So, be prepared to answer many necessary questions.
3. Make sure they are a true professional because you’ll be entrusting them with your company’s data. A tax preparer respects the confidentiality of your information, and failure to do so can result in severe penalties.
4. Verify that the person or company you hire will file your tax return electronically. It’s much easier and convenient for making payments and receiving refunds.
5. This person should have a PTIN (Preparer Tax Identification Number).
6. It’s important to know the three types of professionals with unlimited representation rights before the IRS:
- Enrolled Agents (licensed by the IRS itself)
- Certified Public Accountants
7. You should also know that there are two types of preparers with limited representation rights:
a) PTIN Holders
- Remember to verify that your preparer has a PTIN.
- These preparers are only authorized to prepare tax returns.
- They cannot represent their clients before the IRS (except for matters related to returns they prepared before December 31, 2015).
b) Annual Filing Season Program Participants
- This is a voluntary program in which tax return preparers who are generally not certified public accountants, enrolled agents, or attorneys can participate.
These two types of professionals can only represent clients who they prepared and signed returns for before IRS revenue agents, Taxpayer Advocate Service employees, customer service representatives, and similar IRS employees.
8. If you want to verify the credentials of the preparer you plan to choose, you can do so on the IRS directory.
9. Make sure you fully understand their fees and what’s included. This way, you won’t be surprised by additional services that can be quite costly.
10. Check if the company or individual you include in your business will be operating for months or years after filing your tax return. This way, they can answer any questions about the preparation they did.
11. Make sure the professional has a good reputation, signs the return, includes their PTIN on the document, and provides you with a copy of the return.
12. Never sign a blank tax return.
How much does a tax preparation expert cost?
When choosing a tax preparer, you should consider the prices.
Most preparers do not have a fixed price, and this applies to us as well. The price varies depending on several factors such as the size of the business, their income, among others.
However, we won’t leave you in the dark.
What we can do is give you an idea or a price range to consider when hiring the services of an individual or a company.
At Rex Legal, our fee starts at $400 annually (that’s the minimum price, which means it can be a little more or much more depending on the type of business you have).
I would prefer to prepare my tax return myself, is that possible?
The answer is no.
If you’ve read all the information in this article, you’ll understand the complexity and requirements of this task.
You need to train as a tax preparer, obtain the necessary IRS permits like the PTIN, Form 1120, 1065, among others.
Your business’s tax return is not the same as your personal return.
So, unfortunately, you can’t do it on your own.
But what you can do is dedicate your time to educating yourself about what’s necessary to choose a tax preparer who will benefit your business rather than harm it.
That’s why we created this article, so you can make the best decision.
At Rex Legal, we prepare your tax return
We have the permits and the necessary training to provide great assistance to your business.
So, if you need help from an expert to correctly prepare your tax returns, we’re here for you. Just contact us here.