Accounting is a specialized practice that very few laypeople are capable of doing fully, and well, although that doesn’t stop them from trying. Here are a few signs to watch for to determine if it’s time for you to hire a tax accountant.
1. Filling out your personal taxes intimidates you
Almost everyone has some trepidation when it comes to filing their taxes. Did you include all the necessary information? Did you put that figure in the right box? What does ‘that’ even mean? Aside from the regular tax questions and concerns you have, you also have to worry about how to file. Do you file a paper return? Go into one of those cash back places? Or do you try tackle the tax software on your own? If you have qualms about any of these things, hiring a tax accountant is a good idea.
2. Do you know the business tax laws?
If the answer is no, this too is a good reason to a hire a tax accountant. Whether you are a small business or a sole-proprietor, there are certain things you have to account for and claim. As a sole-proprietor it can be difficult to separate business expenses from personal ones when reconciling your bank accounts. You need to figure out your income and expenses, as well as calculate home office costs, and find out if there are any tax credits you can apply for. Business taxes can be much more complicated than personal taxes, so if you aren’t comfortable filing your personal taxes, you definitely shouldn’t be filing your own business taxes (www.gov.uk/browse/business/business-tax).
3. You’ve never used tax software or aren’t good with the internet
Almost every accountant routinely uses online tax software to complete and file tax returns. This software is forever changing and being updated – not to mention the varieties of software available to choose from. If you aren’t particularly good with computers or using the internet, especially where sensitive information is concerned, like it would be with online banking, you best leave it to the pros. There is a lot of information an accountant can find online through the IRS’s website. Their certified status allows them to access your tax history and some pertinent, current tax documents that you may need to file your return. Getting someone who knows where to look and how to navigate these waters is important.
4. You’ve filed incorrectly in the past or made major errors on previous returns
Mistakes on your tax return can have serious financial consequences and can even trigger an audit. A big return could end up getting clawed back, or you could face interest charges if you pay the incorrect amount owing (based on your calculations). If you have made errors on previous returns that have had a significant impact on your personal or business taxes, don’t keep making the same mistakes. Get professional assistance. You don’t want to be under the tax microscope for years to come, or be accused of breaking any tax laws (which are federal-level offences). Ignorance is no excuse, so its far better to have someone with the knowledge and experience necessary to get the accuracy you need.
5. You’re facing an audit
Do not force yourself to submit to an audit without professional guidance or assistance. Digging up all the paperwork you need, as well as locating previous year’s returns can be a lot of hassle. Having a professional accountant guide you through the process is far less stressful, and they can likely identify any problems ahead of time, you aren’t surprised by the results of your audit. An audit can result in a hefty tax bill depending on the situation, so it’s good to get ahead of things.
While there are many people out there who have the luxury of filing very simple tax returns, there are many more for who things are much more complicated. From divorces and dependents to rental properties, home offices, foreign income and home businesses, sometimes an experienced tax accountant can really take a load off your mind. Don’t be afraid to contact a professional this year if you find your tax situation has grown complicated, or you simply don’t know what you’re doing!