Its tax season, and with tax season comes a lot of questions about your business expenses and activity over the past year. These can be tough questions to answer, especially as your business continues to grow and tax laws change.
Small businesses may even have a higher risk of being audited, so being 100 percent certain about your taxes is not only going to provide you with peace of mind, but can keep you from ending up in a very tight spot.
Review your options for dealing with your business taxes so that you can make the right decision about handling your business taxes.
Using Tax Software
As a startup you probably don’t have a lot of money to spare, and you may not even have complex finances, so handling your own taxes with software like Quickbooks or TurboTax Business might be the perfect option for you.
Pros of using tax software include:
- Significantly less than hiring a professional
- Easy to use interface, with step-by-step instructions
- Makes filing quick (as long as you actually sit down and do it)
Cons of using tax software include:
- Mistakes are more likely
- Your company might miss a deduction it is eligible for
- Added stress, specifically if you are not comfortable or familiar with tax laws
Hiring a Seasonal CPA
If you are not that comfortable filing your own taxes, or you have reached a point where your business finances have become rather complex, hiring a seasonal CPA to assist you with your taxes might be the best option.
Pros of hiring a professional include:
- Higher quality software, which means less room for error.
- Access to professional advice and answers to questions or concerns.
- Resolutions to complex financial issues are much quicker and more efficient.
Cons of hiring a professional include:
- More expensive.
- Takes more time, especially since it is a CPA's busiest time of year.
- Scams are possible, so spending time checking references and credentials is important and time consuming .
But what if you feel like you need year-round assistance with your business finances? Handling multiple employees, contractors, and clients can get overwhelming very quickly, and your business expenses can get out of hand.
There are several options when it comes to handling your year round expenses. These include:
- Handling all the company accounting yourself using software like Quickbooks.
- Having an internal employee devote time as needed throughout the week to handling accounting.
- Keeping a professional accountant on retainer.
- Hiring a part-time or full-time accountant.
Keep in mind that you may not have enough work, especially as a small business, to keep a full-time or even a part-time accountant occupied throughout the year. In fact, you probably only need a few hours of assistance as needed throughout the year.
Looking internally for basic accounting and payroll assistance might be the best solution if you want a more versatile employee. If you have someone handling accounting and payroll part-time, it is most likely the best option to hire a professional to do your taxes and check your accounting.
Weighing the pros and cons of software or a certified professional is important when making your business tax decisions. And remember, your needs are going to change rapidly year to year, so be prepared to change strategies when you've outgrown your solutions.