As soon as you turn eighteen, there is always the excitement of adulting. Going to those late-night parties and moving out of your parent’s home. All these are super awesome until responsibilities knock on your adult door.
One of the significant adulting downers is paying your taxes in the right way. Woe unto you if you have zero accounting background.
Do not get it twisted; I am a firm supporter of giving to Caesar what belongs to Caesar. It helps in the development of public utilities. However, every law-abiding citizen must pay their taxes to experience these privileges.
Tax accountants come in handy for this exercise. They are knowledgeable in the area, and you will be able to save on time due to mistakes you may make.
Besides the knowledge and time saving, a tax accountant will help you reduce tax costs. Depending on your type of business, a tax accountant will show you areas in your business that can reduce tax cost. This will, of course, be in line with the law and accounting principles.
Putting all the above into consideration, you will need laid down principles, procedures and signs to check out to hire a great tax accountant. Some of the major questions to ask include;
1. What type of licence does your tax accountant have?
Just like any other profession, tax accountants have different types of licences to their name. These licences are most likely to influence your choice. This is due to the level of knowledge and expertise each licence comes with.
The three licences are;
● CPA (Certified Public Accountant)
● EA (Enrolled Agent)
● Tax Attorney
CPA (Certified Public Accountant)
This is a title given to an individual who has passed the CPA exams, gained a significant amount of experience or furthered their education. It is the highest level of licence an accountant can acquire. The state gives it.
Other than performing essential accounting functions like bookkeeping, they can perform different tasks. These are not limited to auditing, forensic accounting and tax accounting.
They will give you advice on how to plan your finances, investment options that will benefit you, and above all your tax responsibilities.
The prestige that comes with being a CPA, makes them rather expensive to hire. However, if you need an expert opinion on your taxes, this is the group to go for.
EA (Enrolled Agent)
Unlike CPAs who are registered by the state, the designation is given to EAs by the federal government. They usually represent citizens at the Internal Revenue Service (IRS) for tax issues.
According to the National Association of Enrolled Agents, there are about 53,000 registered EAs. They are knowledgeable since they have to pass a three-faced examination which covers all tax areas. Some may, however, qualify by working at the IRS for five consecutive years and be involved in all tax matters.
If in addition to tax accounting you have federal issues with your taxes, an EA will be the best alternative for you.
These are tax accountants who are also lawyers. They can perform all tax accounting functions that CPAs and EAs can perform. However, they introduce the legal aspect of tax.
Tax attorneys are the best if you also have legal issues with your taxes. Tax frauds or other grievous tax charges that can potentially land you in jail require a tax attorney.
2. Is your tax accountant a member of any organization?
Professional organizations have a code of ethics that they abide in. A tax accountant needs to be a member of a professional organization. It is easy to hold them accountable for any gross misconduct.
Here are some professional organizations your tax accountant could be part of;
● National Society of Tax Professionals (NSTP) – Preparation for members to provide high-quality tax preparation services. The members must be proficient and competent.
● National Association of Tax Professionals (NATP) – This is a non-profit organization. It seeks to assist taxpayers in their federal taxes.
● National Association of Enrolled Agents (NAEA) – This is mainly for Enrolled Agents who have completed the three-part exams by IRS.
● American Institute of Certified Public Accountant (AICPA) – This is an organization for America’s CPAs and is recognized worldwide.
● American Academy of Attorney-CPAs (AAA-CPA) – This is for both qualified accountants and attorneys.
● National Conference of CPA Practitioners (NCCPAP) – It helps CPAs air out their issues, and the organization takes care of such matters.
● National Society of Accountants (NSA) – This body represents practitioners who perform public duties like accounting, auditing, tax, financial and estate planning. These practitioners are required to be updated in tax matters and continuously pursue education.
3. How does the accountant charge for their service?
According to Jeff Borschowa of Quickbooks, he reiterates that the more efficient we are, the less time we spend on files. It is, therefore, important to figure out new ways to charge for value to be justified to the client.
Some tax accountants may charge you on an hourly basis. Others have a set of rules and regulations that govern how much they will charge. You must know upfront how much the work will cost instead of being slapped with a hefty fee at the end of the contract.
Depending on the level of engagement required by the tax accountant, some may be charged higher than others. However, here is a guide to know if the charges are relative to the National Society of Accountants.
4. Be sure who is going to work (Do they outsource your work or not?)
Most tax accountants are usually quite busy since their services are needed all year round. He may, therefore, outsource upcoming tax accountants to do your work. This may not sit well with you, I know.
It is therefore vital to be clear with your tax accountant on who will handle your work. This is by Kerry Kerstetter’s words. However, who knows, the new tax preparer you are sceptical about could turn out great.
5. Ask about the frequency of communication
As you know, any form of relationship does not blossom unless the communication is normalized. It is mind wracking when you have no idea about what the other person is doing.
Having a tax accountant is a business relationship. He needs to know as much as possible about your business or personal finance. You also need to be in touch with how far he is with the tax preparations and any challenges he may be facing.
It is therefore vital to get a tax expert who has the same communication values as you desire. Omar Visram emphasizes on the importance of establishing clear expectations, consistency of communication and using appropriate tools.
Tax preparation, especially for non-accountants, can be confusing, time-consuming and even nerve-wracking. It is, therefore, a great idea to hire a tax accountant to ease up your burden.
It is economical to hire a tax accountant as well since he will use his expertise to help you make better financial decisions.
You may have been wondering who the best tax accountant for you is? Or better still, which is the best approach you will employ to hire an expert cheaply? You now have five amazing steps above that you can use.