First the bad news: If, like most small business owners, you are organized in a way that makes April 15 your tax filing deadline, you’ve probably waited long past the time necessary to find a top notch tax preparer. The top notch ones are too busy working on the returns of others to be talking to prospective clients.
But here’s the good news: As long as you pay your estimated taxes by April 15, you can file an extension that will give you six months to file the paperwork.
What’s an extension? If you run out of time preparing your tax forms by April 15, the IRS won’t postpone your deadline for paying taxes, but they will allow you to file for an extension in turning in your forms. (Technically, it’s called by the IRS, Extension of Time to File Your Tax Return.) As long as the extension form is submitted properly and on time, a six-month extension will be granted. Again: You are required to pay your estimated tax by April 15. Being late with a tax payment–or sending an amount far less than what turns out to be the amount you should have paid–could result in both penalty and interest payments. You can find extension information and forms on the IRS.gov website.
Following is some advice provided by the IRS and others on how to find professionals who can help you file your taxes. Don’t wait until six month from now to start looking.
The IRS uses the designation “Enrolled Agent” (EA) for an individual who has “earned the privilege of representing taxpayers before the Internal Revenue Service.” They must pass a three-part comprehensive IRS test covering individual and business tax returns, or must have worked for at least five years as an IRS employee. The National Association of Enrolled Agents can help you find one of its members nearby you.
(Link: A PDF document from the IRS regarding EAs)
CPA tax specialists
Not all certified public accountants do tax work, so ask. Perhaps the best way to find a CPA tax specialist is to check with other business owners in your hometown. Another resource is a “Find a CPA“resource tool on the website of the American Institute of Certified Public Accountants. (AICPA Home > For the Public > Find a CPA)
National tax-preparation services
National chains of tax-preparation services like H&R Block can be adequate for simple, straightforward personal returns. However, for business-related returns that are more complex, a CPA tax specialist or enrolled agent may be required.The not-for-profit National Consumer Law Center says national chains are less likely than independent tax preparers (see below) to hit you with “junk” fees, such as application and document-prep charges. According to Consumer Reports, preparers in franchise offices of the national chains have usually passed at least a several-week course, and newcomers’ work is reviewed by experienced supervisors, according to the companies. However, the nuances of different types of businesses and your personal situation may require someone with more experience and expertise.
What about local, independent tax preparation services?
If you know of a reputable, local tax preparer who is recommended by other small business owners, you might consider them as an option. However, tax preparation is an area of so much fraud that the National Consumer Law Center is is actively advocating for states to establish protections for tax-time financial products.
The reality is, “Anyone can call themselves ‘a tax preparer'”
Unlike other types of advisors who have rigid certification requirements, say, lawyers or CPS, anyone can become a paid tax return preparer. All a “tax preparer” needs is an IRS Preparer Tax Identification Number (PTIN) and to sign and enter it on all returns they prepare.
It’s important, therefore, to select someone to help you prepare your tax forms who has more qualifications than merely paying $65 for the PTIN. How important? You will be sharing information with your preparer things like: your income, your children and your social security numbers, and lots more details regarding your financial life.
Someone who merely has a PTIN is not necessarily a qualified preparer (but qualified preparers will likely have a PTIN). Their job is to help you fill out a form, not be a tax advisor.
Need more convincing? The National Consumer Law Center has some horror stories for you.
Checklist of things to know before you hire a tax preparer:
- Do they have the appropriate credentials?
- How long has this person been in business?
- Request a list of references?
- Are you comfortable with this individual on a personal level?
- Will you be able to meet with the person all year, and not just at tax time?
- Do they have a current PTIN)?
Advice from the IRS Taxpayer Advocate Service
Created by legislation, the IRS Taxpayer Advocate Service provides assistance and an place to turn when facing a personal crisis due to a conflict with the IRS. It also provides tips (and warnings) for hiring a tax preparer.