Whether for personal or business purposes, tax accounting is a continuous process that needs to be dealt with quarterly and annually. Otherwise, you or your business may end up paying for penalty fees for overpaying or underpaying taxes.
There are many paid and free tax software programs available if you’re financially savvy and motivated enough to tackle your taxes on your own. If you’re not, then it may be a better idea to seek out professional help
If you don’t know much or anything about finance, it’s best to seek a tax accountant’s service. They know tax regulations, planning, filing, and claiming. Such expertise will save you or your business from having financial conflicts with the IRS and other government agencies.
However, there are slight differences in the qualifications you should look for in a tax accountant for individuals and businesses. We discuss them below.
Tax Accountant for Individual
Individual tax accounting usually focuses solely on qualifying deductions, income, and investment gains or losses. Miscellaneous transactions that affect an individual’s tax burden and tracking of funds and expenses may also be considered.
Despite these being simpler and fewer than the inclusions of tax accounting for businesses, some may find them and the tax filing requirements overwhelming. In which case, one must turn to a tax accountant for professional help.
Ask yourself: Do you need a tax accountant?
If you’re unsure of whether you must employ the service of a tax accountant for yourself, consider the list below:
- Do you own a house or a rental
property? - Did you sell a real estate
property? - Do you need IRS representation?
- Do you need to delay filing a tax
return? - Do you earn from freelance work?
- Do you have other sources of
income besides your office job? - Are you in the stock market?
- Do you have capital gains?
- Do you earn interest income or
dividend income? - Do you need guidance on making
charitable donations? - Do you have a situation calling
for an amended return? - Do you want to start estate
planning?
If your answer to one of the questions above is “yes,” then seeking the assistance of a tax accountant may be your best choice.
Tax Accountant for Business
Businesses have more to deal with regarding taxes and accounting, mainly because they have a bigger scale. Earnings and funds are tracked, as well as financial obligations to and from other companies, i.e., operational expenses, shareholder funds, etc.
The law doesn’t legally require a business to use a tax accountant, but it is a common practice in large organizations. This is because there are multiple records and requirements involved.
If you own a small business and thinking about doing a DIY tax filing or claiming, you are free to do so. Hiring a tax accountant for business may be your better option for monetary and non-monetary benefits.
When to seek out a tax accountant
Seek the expertise of an accountant for your business if you:
- Are not familiar with the tax
regulations and laws - Spend too much time on accounting
tasks such as filing your tax return and bookkeeping - Have a revenue that has a higher
value than your profit - Want to expand your business,
e.g., open a branch in another state, hire more employees, etc. - Want to apply for a loan
- Are looking for investors
- Have been issued an audit notice
- Earn more than $200,000 per year
- Need to deal with the IRS
Benefits of going to a tax accountant
Opting to go with a tax accountant with the above mentioned as reasons will save you a lot of trouble because you:
- Don’t have to talk to the Internal
Revenue Service alone, - Can get tax debt reductions,
- Avoid or reduce penalties,
- Stop levies and liens,
- File for claims properly,
- Can reclassify your expenses so
you can allot a budget for more critical operational costs, - Defer income to the following
year, - Find a better way to pay for
insurance, - Avoid unnecessary tax expenses
because of miscalculation or wrong filing, - Don’t have to cram when the
deadline for tax return filing and audited financial statements come, - Don’t have to stress about pausing
operations because of expired permits and licenses, - Gain an organized record of
receipts and accounting and financial data without spending too much time and
energy on bookkeeping, - Comply with the legal requirements
of government agencies, - Can focus on the growth of your
business, - Pay your employees fairly.
Conclusion
Many individuals and small business owners neglect the importance of tax accountants. They often look for an accountant only when the deadline is just days away or when conflict has already set in. Some even strive to do it themselves to save money.
However, having a tax accountant DOES save you and your business money and keeps you stress-free. You need not deal with reports and penalties for incorrectly filed tax returns. You get to update your books on time. And, you need not worry about audits. You’ll be confident that your records are complete and are complying with government requirements.