One of the most important decisions that you will have to make concerning your business or personal finance is to decide whether to hire a tax accountant to help you file your tax returns. When it comes to tax preparation, you can either opt to do it yourself or you can hire a tax accountant to do it for you.
What Does a Tax Accountant Do?
A tax accountant has in-depth knowledge of tax laws and regulations. He/she will help you file your tax returns in compliance with government laws and procedures, while still helping you save money through various tax deductions. Most tax accountants provide advice on how you can save money on tax while still falling in line with the tax laws and regulations in place.
Advantages and Disadvantages of Using an Accountant
Hiring a tax accountant comes with its own set of advantages and disadvantages. Here’s a look at some of the most obvious pros and cons to using an accountant.
Advantage: Save Time and Money
One of the major reasons why many businesses hire a tax accountant is to save them the hassle of tax preparation. Reading, understanding and implementing any changes brought about in tax filing can be a highly time-consuming process. Going by the age-old adage of ‘time is money’, the hours spent preparing and filing your taxes can end up costing you more than what you would have to pay to have a professional do it for you.
Another important factor to consider is that a competent tax accountant can help you save money on taxes. By identifying all the ns on a tax deduction that you’re eligible for, an accountant can help you save a considerable chunk when it comes to your taxes.
Disadvantage: Tax Accountants Do Not Come Cheap
A good tax accountant will charge pretty high rates for his/her services. While the possibility of saving money on taxes appeals to most business owners and individuals alike, the biggest deterrent to hiring a tax accountant is the cost. Tax accountants do not come cheap. Taking the plunge and paying someone to file taxes might seem as a luxury for most business owners who are just starting to grow their business. ‘Why to spend money on an accountant when I can do it myself’ is the attitude most small-time business owners adopt once they realise just how much they would have to pay to hire an accountant.
Advantage: No Room for Error
Tax preparation is quite a complex process. Unless you’re an experienced professional, there’s a pretty high chance that you will make some mistakes when calculating tax and crunching numbers. When you hire a tax accountant to do this for you, you can be sure that the final numbers are a hundred percent correct. A tax accountant leaves no room for errors. By hiring a competent tax professional, you will not have to worry about incorrect tax filing and the possibility of having to pay fines or penalties for any mistakes that you might have made during the process.
Disadvantage: Not All Tax Accountants Are Reliable
Filing tax returns and ensuring it’s done correctly is a very important aspect of running a business. While hiring a tax accountant to do this for you is a smart move, you need to be very careful about who you hire. Not all so-called tax accountants are capable individuals who know the ins and outs of tax regulations. If you hire someone who does a sub-par job, you could land yourself in a lot of trouble. So, it is of utmost importance that you do your research and hire someone reliable and highly experienced to handle your tax preparation and filing needs.
Advantage: Tax Preparation Fees Might Be Deductible
When you hire a tax agent or accountant, one indirect advantage that you gain is that the tax preparation fees that you incur may be deductible the following year. So, not only do you gain the expertise and knowledge of an experienced professional when it comes to filing your tax returns, but, you also gain a financial benefit by way of a tax deduction. Now that is definitely great news.
Disadvantage: Need to Plan Well in Advance
Another big drawback to hiring a tax professional is the need to plan it all well in advance. As mentioned earlier, there are a lot of unqualified and dodgy tax professionals out there. If you want to hire one that’s good and has a lot of experience, then you need to plan it out ahead of time. Finding a good tax accountant close to the tax filing date can be a challenge as most of them will already be busy with other clients. So, unless you’ve planned ahead, you will be left with very few viable options when it comes to hiring a competent accountant.
There is no clear-cut answer to the question—do I need to hire a tax accountant? The answer depends on various factors such as: are you well versed when it comes to tax laws and regulations? Can you invest the time and effort it takes for tax preparation? Can you be sure that you comply with all the government laws when you file your taxes? Are you sure that you’ve made use of all the available tax deductions to save you money? Depending on your answers to these questions and considering the blatant advantages such as convenience and peace of mind, you can then make a decision on whether you need to bring in a professional to take care of your taxes.
The whole idea behind hiring a tax accountant is to make things easier for you. If you are one of those people who struggle with tax preparation, who doesn’t like the idea of spending hours going through financial statements and accounts and learning about tax regulations, then maybe the best thing for you to do is hand over those responsibilities to an expert. Someone who specialises in those areas and can get the job done quickly and efficiently.