There are no legal requirements for using a tax accountant. However, there are some benefits to acquiring professional help from an expert tax accountant, especially if you are unfamiliar with the world of tax. They will offer you peace of mind that you are not making any mistakes while opting for a tax return.
How to Choose a Good Tax Accountant?
One doesn’t essentially need to own a business or have to be wealthy for availing benefits of hiring a tax accountant. Many people who want to prepare their own tax return recoil at the thought of doing so and wonder how to choose a tax accountant.
If you are also one of those who finds it complicated to prepare their taxes or face issues while paying off a tax debt, filing back taxes, etc., you must find the right tax accountant.
Check out this blog to know more about how to choose a good tax accountant.
How to Find the Right Tax Accountant for Your Business?
Finding the right tax accountant can be a challenging task. So, if you are interested to select a good CPA for your business, then check out the best and most helpful tips on how to choose a tax accountant.
- Check Out Their Specialisation: Consider opting for a tax accountant who specialises in individual income tax returns. You can check out their educational qualifications for sorting out the same.
- Verify Their Registered Identification Number: Most businesses and organisations like to prepare taxes with tax accountants who are registered with the IRS and have a Preparer Tax Identification Number (PTIN). In order to verify their registered identification number, you can simply look out at the IRS Return Preparer Office Directory.
- Take a Look at Their Licence: Before hiring a tax accountant, you need to look at some of their important credentials like their licence status (whether they are licensed from their State Board of Accountancy), and the date of issue and expiry of the licence. Apart from this, you can also check their suspensions and other disciplinary actions with the State Bar Association.
- Consider Their Experience: Always try to choose a tax accountant with several years of experience as they will have a more detailed understanding of the tax laws and codes than any newly certified professional. Also, check out whether the tax accountant has experience in filing tax returns electronically.
- Ensure They E-file: Make sure that your tax accountant e-file your federal tax return. This is quite essential to e-file your tax returns for better safety and security of your information, for better accuracy, and for faster returns. So, ask them about their proficiency in e-filing your tax returns.
- Check Whether They Offer Any Audit Defence: Ensure to go for a qualified tax professional as they are authorised to gather your information and deal with the IRS directly on your behalf. So, it is definitely a better option to go for a professional that can represent you before the Tax Court or IRS.
- Ask for Referrals: One of the best ways to get leads for your business is to ask for referrals from other clients. This will help you in getting recommendations for whom to hire and whom to not.
What Are the Different Types of Tax Accountants?
Usually, there are three types of primary tax professionals that one needs to hire to provide help with the tax work. Here are these three:
- Enrolled Agent: As far as IRS credentials are concerned, Enrolled agents are considered elite tax professionals. As they have gained specialisation in certain tax areas and are federally licensed and authorised, they are the best person to deal with for preparing tax returns for individuals and businesses and for dealing with complex tax situations. In order to maintain their license, they essentially need to complete their education, pass a rigorous three-part exam and undergo background checks administered by the IRS. Some enrolled agents are even approved without undergoing a test as they must have experience working with the former IRS employee.
- CPA: A CPA or Certified Public Accountant is an accounting professional who is licensed by the board of accountancy of the state which they work for. They also need to pass the rigorous three-part CPA examination. Apart from filing several types of tax returns for businesses and individuals, one could also approach a CPA for various other reasons. A CPA can also provide help with various financial planning services and finding relevant credits and deductions as well. In fact, if you are dealing with any audit, then a CPA is liable to represent you before the IRS.
- Tax Attorneys: Tax attorneys are lawyers who are licensed by state courts and state bar associations and they specialise in tax laws. In addition to juris doctor’s degrees, they also acquire a master of law degree in taxation. If you need help with any complex legal matters or want to represent yourself before the IRS or court, hiring a tax lawyer will be the best thing.
What Are the Credentials a Tax Accountant Should Have?
A tax accountant must possess a bachelor’s degree in accounting or a related field by either taking tax accounting courses as electives or with a post-graduate certification in taxation. Apart from this, there are some advanced degrees in tax accounting that they can opt for:
- Master’s degree in accounting with a taxation track
- Master in Tax Accounting (MTA)
- Masters of Science in Taxation
MBA in Taxation: An aspiring tax accountant who is interested in gaining more proficiency in tax-related matters and tax law can pursue a Masters of Law (LLM) degree in Taxation or a JD-LLM Joint Degree in Taxation.
While for a tax accountant, it is not essential to have a CPA certification, it is found that those who are earning CPA credentials get more job opportunities and have the potential of earning a higher salary.
Accountants working with individuals and businesses should also have earned their respective designations through the Accreditation Council for Accountancy and Taxation.
An Accredited Tax Advisor (ATA) involves five years of experience in the tax accounting field and an exam, while an Accredited Tax Preparer (ATP) should pass an exam that corresponds to the preparation of individual tax returns.
What Are the Questions to Ask a Tax Accountant?
Before committing your personal business to someone else, it is important to interview professionals. You can ask them relatable questions regarding their knowledge and experience. This will help you to explore more regarding the tax accountant.
Some questions that you should ask them to include:
- How long have you been working as a tax accountant?
- What designations or licenses do you have?
- In particular which tax issues do you specialise in dealing with?
- Do you outsource any of these tasks or does your interim team perform all the work personally?
After discussing your business requirements with them, you can even ask them these questions:
- How much will they charge for finishing the tax return? Are the fees negotiable?
- How long will it take to finish my tax return?
- Am I paying the right amount of tax?
How much does a Tax Accountant cost?
A tax accountant usually charges their clients on the basis of the work required for the tax return and the type of return that you are filing for. It may vary from ₹ 500 - ₹15000. Also, their charges vary from the location where they are residing.
In India, an entry-level tax accountant with less than 1 year of experience earns an average of ₹4,25,000. While a mid-career tax accountant with 5-9 years of experience earns an average of ₹5,08,682, and an experienced tax accountant with 10-19 years of experience earns an average of ₹5,40,000.
A good tax accountant will not only help you in handling the tax return needs of your business but they will efficiently help your business with other administrative tasks and valuable services as well.
FAQs Related to a Tax Accountant
Sometimes, the tax accountants might make a mistake on your tax return, either intentionally or unintentionally. But the IRS catches these potential mistakes at the time of auditing and this is followed by an assessment of some additional tax interest and penalties.
Apart from preparing taxes for their clients, accountants usually help businesses and individuals with estate planning and financial planning. But the knowledge level of a tax accountant is limited to their ability to provide advice to clients regarding preparing and filing tax returns with the IRS.
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