Is It Time to Hire a Professional to Prepare Your Books and Tax Return?November 22nd, 2022 Posted by Aidy Schreiber Bookkeeping Tips 0 thoughts on “Is It Time to Hire a Professional to Prepare Your Books and Tax Return?”
Is It Time to Hire a Professional to Prepare Your Books and Tax Return?
Regardless of the current size or scope of your business, you’ll likely benefit from hiring a professional to prepare your books and annual tax return. While it’s possible to perform these tasks on your own or hire internally, these are time-consuming processes that might be best performed by a professional who knows exactly what they’re doing.
Many smaller businesses make the mistake of handling the majority of operational tasks without the assistance of professionals. Along with the length of these processes, it’s also easy to make costly mistakes if you don’t have ample experience with preparing your books and tax returns. The following guide should help you determine if now is the time to hire an accounting or bookkeeping professional.
Financial Difficulties When Growing a Business
There are plenty of reasons why a company should consider hiring a professional to prepare their books and annual tax returns. Even though your company’s needs can differ depending on the current stage of growth, the need for a tax or bookkeeping professional is ever-present.
The professional you hire can help you during the formation of a company, if a tax audit needs to be done, and when a loan application needs to be submitted. Keep in mind the professionals you hire for all of your bookkeeping needs don’t need to be employed full-time. It’s possible to obtain these services on a monthly basis or as needed.
Many small businesses believe that hiring a bookkeeping professional would cost too much money. In reality, the costs are rarely ever too high since services can typically be customized to suit your exact needs.
Hire a Professional When You Don’t Have Time to Prepare Your Books
No business owner wants to spend their time performing bookkeeping services. While these services are essential, they aren’t the main tasks that your business must perform on a day-to-day basis. As a business owner, you likely want to spend more time doing things that are directly related to your current business. However, keeping your books in order and your tax returns up-to-date is necessary if you want you want your company to remain financially strong.
Keep in mind that nearly 40% of small business owners usually spend over 60 hours each week doing their taxes and bookkeeping. Along with taking up too much time, you likely don’t have the expertise needed to avoid making any mistakes during these processes. A mistake on a tax return can lead to an audit, which only worsens the situation. If you find that you’re currently spending too much time on these tasks, it may be time to hire a professional.
Hire a Professional When You Need Advice About the Company’s Legal Structure
Not every business has the exact same legal structure. It’s possible for businesses to be referred to as corporations, sole proprietors, limited companies, or limited liability partnerships. If you have yet to determine which legal structure your business will have, it might be the right time to hire a professional. The person or firm you hire should be able to help you identify which legal structure is best for tax purposes.
While many small businesses enjoy the sole proprietor classification, working as a self-employed company means that the owner is directly responsible for meeting any business-related obligation. In the event that your company defaults on a loan or doesn’t pay a supplier on time, these issues would affect you as the owner. Limited liability structures are different since the company’s liability is only placed on the assets that are directly owned by that company.
Hire a Professional When You Need Help with Your Financials
While the financials for a small business are less complicated, they can still become more complex if you make the mistake of preparing your books and tax returns on your own. A single mistake can balloon and lead to many additional mistakes. In the event that the bookkeeping professional you hire uses bookkeeping software, your business accounts can be sent directly to you once they’ve been prepared.
This professional should also be able to develop charts and tables that allow you to better understand the current financial situation that your company is in. With this approach, it will become easier for you to monitor the financial health of your company.
Hire a Professional to Save Time When Filing Your Tax Return
Filing a personal tax return is difficult enough. Attempting to fill out and submit a tax return for your business without any professional help can take an ample amount of time that’s best spent elsewhere. If you want to hire a professional for this process, it’s also practically essential that a professional is hired to prepare your books. Otherwise, you might be providing a tax professional with incomplete or messy books that would take a long time to sift through.
When it comes time to file your taxes, you shouldn’t even need to think about this process. Full bookkeeping services should cover all of your tax return needs. It might also be time to hire a professional if your recent business tax returns haven’t gone the way you expected them to. It’s possible that you aren’t properly deducting specific expenses, which would result in a larger tax bill.
When you hire a bookkeeping professional, this individual will identify all of your business expenses and categorize them correctly. While doing so, they’ll spot every potential deductible expense and note them on your tax return.
They can also assist you in identifying less common deductions. For instance, it’s possible to deduct the annual fee on a business credit card. Having a professional by your side should make it easier to avoid missing out on certain tax write-offs and deductions.
Bookkeeping professionals are able to assist you throughout every facet of your company’s growth and development. During the year, the professional you hire can prepare your books as well as your annual tax return, which substantially reduces the possibility of a tax audit by the IRS.