Tax season has arrived, and although some people prefer to do their tax returns themselves, others seek out tax professionals’ assistance. But how can you tell if you need a tax expert? We will discuss the top signs you need a tax professional in this blog.
Why do people need tax professionals?
People seek the assistance of tax professionals for a variety of reasons. Since they are most knowledgeable about tax rules and regulations, they can ensure your tax returns are accurate and compliant with IRS standards. Also, they may assist you in finding tax deductions and credits that you would have overlooked on your own. This, in turn, can help you maximize your assets. Partnering with a tax professional can help you gain peace of mind.
Signs You Need a Tax Professional
1. Client Dependence
If you attribute more than half your income to a single client, you fall under the category of “independent contractor,” more so than “SMB owner.” While it can be tempting to work exclusively with a lone client who pays well and on time, it puts you in the subcontractor category, even if you have other employees. This category will be reflected at tax time. For example, while subcontractors may be eligible for certain tax breaks, they have to be deemed essential for the company.
2. Stress And Fatigue
Not surprisingly, many SMB owners put in far more hours than their employees. And many resist taking time off for fear the business will falter while they’re away. This feeling of stress is exacerbated come tax season. If the mere thought of completing your company’s taxes causes stress, then you won’t be in the right mindset to think about business growth.
3. Businesses failing to thrive or expand
There are several variables associated with a lack of growth in a company. Many SMBs falter once they actually start to make a profit. That’s because increased profitability— and the boost in clients and employees that come with it —means more complex books come tax time. For some business owners, this can be a deterrent to further expansion.
There’s still a lot of confusion surrounding tax professionals apart from the top 6 tax challenges most SMBs experience. Below are some of the most frequently asked questions (FAQs) to help you learn more about them.
Top 3 FAQs About Tax Professionals
1. Is a tax professional the same as a CPA?
While some tax professionals are certified public accountants (CPAs), not all tax professionals are CPAs. CPAs are licensed to provide a broader range of financial services, including accounting, financial planning, and auditing.
2. Is it worth paying a tax professional?
If you have a complicated tax situation or want to ensure that your taxes are filed accurately and on time, hiring a tax professional can be a worthwhile investment. It can also help you avoid costly mistakes that could result in penalties or audits.
3. How much does it cost to have a pro do your taxes?
The cost of professional income tax preparation varies depending on several factors, including the complexity of your tax situation and the location of the tax professional. However, the cost is generally reasonable, especially when compared to the potential penalties and fees that could result from mistakes on your tax return.
Tax Season Is Here: How To Prepare For It
Tax season 2023 is fast approaching, and if you’re feeling overwhelmed, consider hiring a tax professional. They can help you navigate the complexities of the tax system, ensure that your taxes are filed accurately and on time, and maximize your deductions and credits. If you need to assess whether or not hiring a tax professional is worth it, consider doing an ROI assessment.