If you’ve been thinking about hiring a tax pro this year, what should you look for in a good tax preparer? Since there are so many to choose from, it only makes sense that you know what you need before making a decision.
Here are three essential qualities that any reliable tax preparation service will have:
1. Many years of experience. You don’t want a rookie. You want someone who’s been there and done that — hundreds, or better yet, even thousands of times.
How do you find out how much experience a tax preparer has? Simple: ask. Here’s how: “How many years have you been in this business and how many returns have you done during your career?” If it’s less than 3 years and/or 100 returns, you are probably dealing with an inexperienced preparer.
2. A broad range of services. You want a tax preparer who does all kinds of tax returns. And there are many. We usually think of personal income tax returns first, and for good reason, as this is the most common type of return and most likely the kind of return you need prepared first.
But if you are self-employed or run a small business, there’s a plethora of tax returns that you may need help with, depending on what kind of entity you are, i.e. sole proprietorship, partnership, C corporation, S Corporation, LLC. Each of these entities has its own unique tax issues, and each has its own particular income tax return to file. So you want a tax preparer who is well versed in every type of business and self-employment tax return.
Another key issue is whether your business has employees. If so, you’ll need help with payroll (preparing paychecks), payroll taxes, and payroll tax returns. This area can be quite complicated and you certainly don’t want to do-it-yourself.
How do you find out whether a preparer has this breadth of experience? Again, ask him/her. “What kind of tax returns do you prepare? Personal only, or personal and business? How much experience do you have preparing returns for all types of entities?” (as listed above)
3. Integrity. This is the most important characteristic of all. No matter how much experience a tax preparer has, no matter how well-versed he/she may be in all areas of tax law, if they are in the business of helping taxpayers fudge on their returns, this is not the preparer you want anything to do with.
There are plenty of legal tax reduction strategies available to both individual and business taxpayers. Furthermore, never forget that you are ultimately responsible for every dollar amount reported on your tax return. If your return is prepared fraudulently, the IRS will come after you first.