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22 August, 2022

Why a Small Business Owner Should Use a CPA for Tax Preparation

As an owner and operator of a small business, you wear many hats, and you are always on a tight schedule.  You are mired in day-to-day responsibilities of inventory management, product development, customer relations, and the list goes on.

 So, when it comes time to prepare your taxes, you can either take on this ambitious task yourself, or hire a certified public accountant (CPA) to do it for you. Afterall, outsourcing tax preparation services will save you time, money, and aggravation.

Although there are some business owners who can manage their own taxes, the vast majority of people hire a CPA who has tax experience. Outsourcing tax services  allows them to maximize their tax returns, stay in compliance with current regulations, and leverage the  knowledge CPAs have  about the latest tax laws.

 Differences Between a CPA, Tax Specialist, and an Accountant

 It is worth noting that there are different types of professionals who have varying levels of knowledge and expertise on tax matters.  It is true, for example, that not all accountants are CPAs, but they are qualified to process your business tax returns.

 You could choose from among these types of professionals for tax planning and preparation services:

 Accountant —An accountant is a financial professional who performs accounting functions such as account analysis, auditing, or financial statement assessment. They also can prepare your business tax returns.

 CPA — A CPA is a licensed professional with advanced education and training in many areas of accounting and business.  CPAs have passed a rigorous examination and must comply with stringent continuing education requirements from a state board on a frequent basis. The CPA designation normally requires a degree.

 Tax Preparer — A tax preparer at companies like H&R Block is trained on tax software to assist taxpayers in filing their tax returns. Some tax preparers are familiar with the tax rules. But they don’t have near the level of expertise or accounting background CPAs have. A licensed tax preparer does not need advanced degrees for basic tax preparation but must show competence through a formal exam or IRS employment.

 Enrolled Agent — An enrolled agent, or EA, is considered a tax specialist who was certified by the IRS. An EA does not require a degree like a CPA does. However, the EA designation indicates a tax professional is knowledgeable about tax laws.

Benefits of Hiring a CPA to Prepare Your Taxes

Ensures You Are Current with Tax Law Changes

 Tax laws can be changed at any time, and you, as a small business owner, will not necessarily be aware of the latest tax laws. If you have no representation from a CPA, then the awesome responsibility of researching tax laws, and figuring out how they pertain to your business, falls entirely on you. That is a lot of time and energy that is taken away from your business ownership role.

However, a CPA will be thoroughly knowledgeable about the latest changes to tax laws. Meaning, you the business owner can focus exclusively on managing their company. You can relinquish the tedious and time-consuming task of exploring tax codes and laws to your professional accountant.

Improves Recordkeeping

As your CPA works to increase your business tax deductions, he will likely encourage you to improve your recordkeeping, as well. In order to maximize your tax deductions, you need to collect and track the business expenses in an organized fashion.

Almost any tax actions for your small business, particularly ones that involve deductions, credits, and write-offs, will require extensive and accurate records. Your CPA is able and prepared to upgrade your recordkeeping process, and that could end up saving your business money come tax season.

Optimize Your Tax Deductions

 When you hire a CPA firm for tax preparation services, they can help you maximize your tax deductions.  While there are numerous ways to realize deductions, most small business owners do not know about them.

However, experienced CPAs bring immense tax knowledge, and they can identify and optimize all your business deductions. This makes it possible for your business to reduce your tax burden as your professional accountant aggressively pursues ways to lower your tax liabilities.

 Take Advantage of CPA Availability Year-Round

When you partner with a CPA for your tax filing, you also can leverage their financial expertise throughout the year. This gives you continuity of financial management for all seasons, not just the tax season.

Your certified public accountant has not only tax preparation and planning expertise, but they can also provide your business with sharp strategic advice and helpful insights having to do with your financial data. They offer an additional resource to help you make the best strategic decisions for your small business.

Plan for a Successful Future

Your CPA is equipped to provide tax filing and planning services, but they could also be an indispensable resource for helping you prepare for your small business’s successful future. For example, your professional accountant will offer guidance on how to simplify and streamline your tax preparations. They may identify ways to reduce your overhead expenses.

The CPA can consult with your business on certain operational changes that you could implement that will save you money. This strategic financial guidance might extend to other areas like capital expenditure campaigns, purchasing of equipment, and production costs. Your CPA firm may make recommendations for budget cuts, identifying new revenue streams, and streamlining operations.

All of this comprehensive financial guidance you receive from your CPA will set up your business for a more prosperous future.

Provides Peace of Mind

If you attempt to prepare your own business taxes, there is the looming fear afterwards of a mistake being made that could bring about severe consequences from the IRS. What if you failed to identify all the tax deductions that you qualified for? What happens if the IRS decides to audit your small business?

 Instead of succumbing to the stress and uncertainty, hire a CPA and enjoy the peace of mind of knowing your business taxes were prepared competently. You also have the advantage of relying on your CPA for any possible IRS actions down the line. You’ll have a professional accountant by your side who will defend your rights if any legal issues arise.

Saves You Time in Dealing with Complicated Tax Issues

As a small business owner, you could find yourself mired in complex business and investment matters that would require a high level of understanding tax laws. While some business owners might have the skill to attempt handling these sophisticated tax issues, is it worth their time when they have a business to run? 

A CPA is well versed in tax law and tax codes and will be able to adeptly resolve even complicated tax situations for your business. A CPA can swiftly and easily accomplish tasks that might take a skilled taxpayer hours of research in a futile attempt to come up with the correct information.

 Look to DrillDown Solution for Expert Tax Planning Services for Your Small Business

 DrillDown Solution delivers a seamless tax planning and compliance process.  As is the case with all of our programs, tax planning solutions are custom-made based on an individual’s needs, wants, and the goals of your business.  You can expect your business to greatly benefit from our dedicated team of tax experts, ensuring that your tax planning needs are met quickly and efficiently. 

 We make it our mission to understand the needs and fiscal goals of your business. At the core of our tax planning services is the promise to you that we will devise a tax strategy aimed at reducing your liabilities and optimizing profits for your business.

 Our Provo, Utah Tax Planning Services are just what your small business needs.


Note: The material and contents provided in this article are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.

Ed Gabriel, CPA is President of DrillDown Solution and a graduate of Brigham Young University. His clients benefit from over 40 years of experience in maximizing profits, minimizing taxes and putting them in the best financial position possible.