Since tax season is in full swing, I’m getting quite a few questions from new business owners who are just not sure what to do about their income tax preparation. In many cases, they have used TurboTax or something similar to prepare their income tax returns in the past. The “suspicious activity” that caused TurboTax to suspend state filing recently may already have you feeling hesitate about following the same route as in prior years. Add in the start of a new business, and you might be wondering if this is the year to seek the help of a tax professional.
Door #1 – Do It Yourself
If you have a simple income tax return and only need to file a Schedule C to report your activity for your sole proprietorship, it is very possible for you to prepare your own return. You can do this with the help of available software, either off the shelf or online.
If you have more time than money, this certainly can be the right option for you.
This can also be a good option if your business was just getting started last year, and you had very little activity. Take your time in preparing your return and keep asking questions and seeking answers as well as understanding so you know the implications of what you are reporting on your return. Most people should draw the line and seek help when a separate business tax return is required, such as an 1120S Corporate Income Tax Return or 1065 Partnership Income Tax Return. If you set up a separate entity for your business, you should have received a Form SS-4 assigning your employer identification number (EIN) as well as letting you know the income and payroll returns to be filed along with the due dates.
Door #2 – Seek Professional Tax Help
If you have a lot of questions and are less sure of what you should be doing, seeking professional help might be the best option. Heck, you might just want to spend the money and let someone else do the thinking and the work. The first year you are in business everything will be new and you are probably going to receive a lot of advice – solicited and unsolicited – regarding the best way to handle different aspects of your business. It can be exhausting to research and properly interpret the findings to your situation. A tax professional can make sure you are focusing on the right things as well as asking you the right questions to make sure an accurate income tax return is prepared. A professional will also give valuable insight into planning for your quarterly estimates for the current year. If you can afford it, the peace of mind should be worth the money. Make sure you know the cost and what is included before moving forward with a preparer.
As a CPA in public practice, I’ll admit I have a bit of a bias towards seeking outside, professional help. I always tell folks that if I didn’t prepare returns in my practice that I would be paying someone to do mine! However, all tax preparers are not created equal.
Let me say that again, all tax preparers are not created equal.
When bringing on new clients, I’ve come across prior year tax returns from ”˜”tax shops” that were downright embarrassing AND inaccurate. You don’t know what you don’t know so your preparer really needs to know their stuff. Get recommendations from your professional circle and make sure the preparer is a good fit for you before starting to work with them.
The bottom line: You have to do what is right for you and your business. And, only you can determine where the value lies for your situation – saving money and spending time or spending money and saving time. Regardless of your choice, get that return filed and keep moving forward!