The need for tax advice:
As a wag once said, "The only things certain in life are death and taxes." Although this remark was directed at individual men and women, it applies equally to all businesses, large and small, that are required to file their tax returns with the IRS year after year.
At the beginning of your life, as a young man or woman, you may have found this annual ritual of filing the 1040 EZ tax return merely annoying. But with the changes in your marital status, your children and the natural growth of your business, assets and income, this mandatory tax return preparation and filing becomes more complex and requires more tax preparation expertise. At this stage, you will feel that you need outside help and start looking for a qualified and experienced consulting firm.
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Tax laws change very frequently, and it is virtually impossible for a regular person to keep up with these changes. If you prepare and file your tax returns yourself, there are many dangers involved, because you can never be familiar with all the relevant rules and regulations and stay up to date. A qualified and experienced consulting firm will relieve you of much of this worry. Even though there is a cost associated with using tax consulting services, it is easily offset by the legitimate savings on tax payments and the refunds you can claim.
Look for a consulting firm:
- The easiest and most obvious source is word-of-mouth from friends and acquaintances who have had experience with tax consultants.
- From the website of the National Association of Tax Consultants (NATC)
- From the Certified Public Accountant Directory - CPA.directory.com.
After you have created a short list of potential firms, obtain more detailed information from each of them. Then, conduct personal interviews with the firms and check their references. You can also check with professional organizations such as the NATC and the Better Business Bureau to learn about the firm's past work history and accomplishments.
Qualifications for tax consulting services:
Members of consulting firms hold various qualifications such as CPA (Certified Public Accountant), ATA (Accredited Tax Advisor), ATP (Accredited Tax Preparer), or combinations thereof.
They also specialize in different areas of tax advice, such as accounting, tax planning and preparation, tax dispute resolution, etc. You should choose a specialist that meets your specific needs.
If you are a newly formed business, your consulting firm will have the additional responsibility of advising you on many aspects of your business, such as
- Help you determine the most appropriate form of business for your company
- Inform you when the various taxes are due to be paid, and set up systems to take care of this process automatically
- Inform you about what is considered "gross income", which is what the tax office is mainly interested in
- Regularly inform you of changes in the tax code and what expenses are deductible as legitimate business expenses.
Instead of hiring a consulting firm at the end of each fiscal year, sign a long-term contract with them so that tax planning becomes part of your business strategy. That way, you can take advantage of tax savings wherever possible and stay on top of your tax liability, ultimately maximizing your profits.
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