NFIB

What To Look for in a Tax Preparation Specialist
03/ 28/ 2002

If you haven't filed your tax returns this year and are considering using a tax preparation service, today's article by Jeffrey Moses offers suggestions on how to find a tax specialist that can serve your needs.

Even if you have finished your returns for the year, it's a good idea to begin searching early for a tax preparer. An experienced individual may be able to advise you about certain deductions that you can take in the future. The earlier that you begin acting on such information, the easier it will be to gather and keep all required records.

The Yellow Pages is a source to locate accountants, bookkeepers and general tax preparation services. But for a small business owner, it's important to find someone experienced with the needs and special requirements of small businesses. Ask business associates and trusted friends for referrals to tax prep specialists.

Always interview the individual who will be handling your account. Avoid just giving your information to a tax prep firm, which will assign you randomly to one of its staff. You need to know if the individual has experience working with companies similar to yours, what experience he or she has in all the special deductions small companies are allowed, and how well-versed they are in retirement funding for small business owners and employees. If a tax preparer isn't experienced in these particular fields, he or she probably isn't for you.

Here are some specific questions you may want to ask during your interview with a tax specialist:

1. What is your training and background? How long have you been in the business? What companies have you worked for? What degrees do you have, and what professional associations are you a member of (American Institute of Certified Public Accountants, for example)?

2. How experienced are you with small business returns? In particular, ask about home-based deductions (if applicable), small-company deductions, self-employed and small company retirement fund options and deductions, overall tax-saving tips for small companies and self-employed entrepreneurs and specific tax information for your type of business.

3. Will you be able to work with me regularly in the future? It's usually more convenient to continue working with a tax expert who is familiar with your situation and who has all records from previous returns.

4. Will you be available to help represent or advise me if I'm audited?

5. Are you prepared to pay penalties directly caused by your mistakes?

6. How many clients do you have, and how much time can you devote to me? Also, how long will it take to prepare my form?

7. Are you full-time, or working in the field only during tax season?

Questions to ask yourself during and after the interview:

1. Did you find the person easy to communicate with? This is not, of course, an indication of expertise. But it's always more pleasant and perhaps more productive to work with a person that you feel comfortable with.

2. Did he or she seem to address your individual needs, rather than speak in generalities?

3. Does the individual seem easy to reach by phone? Did he or she return your calls promptly?

There are a variety of tax specialists, ranging from tax attorneys (usually the most expensive and possibly knowledgeable), to Certified Public Accountants and Public Accountants (both of which have completed a rigorous college curriculum and have passed a certification exam), to tax prep agents (which may have completed shorter courses and passed less rigorous exams), to enrolled agents, or EAs, (which are the only taxpayer representatives who are licensed by the U.S. government).

EAs are a knowledgeable group of tax practitioners that small business owners might not be aware of. EAs must demonstrate their competency to the IRS before they begin working with taxpayers. To become licensed, EAs must either pass an examination or have been a former employee of the IRS for at least five years in a job that required the person to regularly interpret and apply the tax code. To locate an EA near you, go to the National Association of Enrolled Agents' Web site at www.naea.org.

Usually, tax attorneys, CPAs and sometimes agents are authorized to represent clients during IRS audits. (All licensed EAs can represent taxpayers before the IRS.) But just because a tax specialist is an attorney or CPA doesn't mean that he or she is experienced in small business tax needs. Many specialists work primarily with large companies or with individuals employed by large companies. These specialists may not have the experience you require as a small business owner.

Tax preparation firms may have CPAs, Public Accountants or tax agents available, but sometimes the individuals on staff have little experience with the varying requirements of small business tax law. Always ask to speak with the person handling your return, and take the time to ask all questions describe above.

Small Business Sound Off
Does this story hit home?  Share your story with us