Tuesday, March 25, 2008

Who Should Do Your Taxes?

Just like every other profession, there are some CPAs and tax professionals that are very good, and there are some that are not. Unfortunately, a professional designation does not guarantee perfection. If you hire an outside professional to do your corporate and personal taxes, it is still ultimately your responsibility to look them over and ensure they represent the truth. That is why you must put the final signature on the document. No one expects you to know everything about taxes, but you should feel comfortable that all of the material items are represented. Perhaps a second opinion is not completely out of the question.

We have found that the very best way to create a successful relationship with your CPA is to become their favorite customer. You do this by getting them your information before the busy tax season. It also helps to get them accurate information so their time can be productively spent on your tax situation rather than on the day-to-day accounting taking place in your business. Also, you should never let the month of November end without at least a 1-hour meeting with your tax CPA. They are very proficient at helping you reduce your tax liability as long as there is still a little bit of time before the end of the year. They also usually enjoy this opportunity to receive an update on your situation and offer advice.

If you do your own corporate and personal taxes, then you are very brave. The tax code gets more complex every year, and it is very difficult to stay abreast of all of the relevant changes and how they impact you and your business. We recommend that a professional who is trained and stays current with the tax code be involved in the preparation of your return(s). The amount of additional savings they identify or the potential risk they remove from your filings is usually several times more than the cost associated with their services.

Some entrepreneurs ask their part-time CFO or other staff to complete the company's tax return. For the same reason mentioned above, it is often more prudent to use a tax expert who is current with the ever-changing tax code to keep the company and the owners in compliance.