Why hire a tax preparation service?

Hiring a tax preparation firm is money well spent. Tax rules have become more and more complex. Using a tax consultant to prepare your taxes may save you from paying more tax than you should. It is probably less costly to hire income tax preparation services than a nasty tax surprise and a visit from the auditors of the taxing authority (for example IRS in the US) in your country.

Rather than hire a tax preparation service at the end of the financial year, consider making tax planning part of your overall business strategy. It will help you maximize profitability and limit exposure to tax liability. Many accounting firms also specialize in tax planning. When they advice clients on how to structure a business venture or a transaction, they help them take advantage of tax savings wherever possible. A few examples of such transactions are multiple-state operations, purchase or sale of business, business succession planning, taxpayer dispute resolution and e-commerce transactions.

How to select a tax planning firm fo my business?

There are several things to keep in mind while hiring a tax consulting firm.

Size: Consider a tax planning and preparation service that is similar in size to your company. Large companies tend to hire big four consulting firms.  If you are a small company consider one of the smaller tax consulting companies that have the desire, expertise and resources to help your business.

Industry Experience: Preferably look for a tax planning and preparation service that has previous experience in your industry.

References: Ask the tax consultanting service for a few references. Call previous and current clients and inquire if they were happy with the service. Did they gain from tax planning service’s advice? Ask if the tax consultant is easily accessible. Does she take enough interest in the engagement.

License to operate: Check if the tax planning firm is registered and licensed to operate in your state or country.

Software compatibility: If you use financial software in your company, make sure the software used by the tax planning and preparation service is compatible with it or you will not be able to transfer any data back to your company.

Education and Experience of professionals: Ask the tax planning service about the educational background and experience of its professionals. If you want to hire the tax planning service for a short term assignment, make sure they have the requisite experience in the area. Search on the internet for any articles written by the professionals of the company. It can tell a lot about their area of expertise.

Some tax planning and preparation service firms have expertise only in personal income tax service. Make sure the company you hire has enough experience in business tax services. Can they help you with business tax preparation for all agencies including federal, state and the city?

Interview your consultants: It makes sense to interview specific tax consultants who will work on your account. Do the tax consultants have the requisite skills and experience to work for your company?  Are the tax consultants easy to work with and are they approachable? Are they interested in working on your account?

Specialized knowledge: As a small business owner you may need advice regarding capital gains taxes, estate taxes, real estate taxation, incentive stock options, multi state operations, e-commerce transactions, purchase and sale of property, business succession planning, tax dispute resolutions etc. Can the tax planning and preparation firm offer you advice in these areas?

Test them before hiring: Before you make the hiring decision, ask the tax planning and preparation services company to examine your business model and financial statements and provide some example as to how they can help you save money.

How much does it cost to hire a Tax planning and preparation service?
Fees for tax planning and preparation services vary by country and the level of service. Ask friends, relatives and business associates for recommendations. Tax consultants can charge by the hour or based on the forms you need to complete to file your taxes. For example in the US, a simple personal tax return with form 1040 may cost about $100 while complex business taxes can run into thousands of dollars.