It’s that time of year again.
When April 15th looms, and business owners and 9-5ers alike start stressing about filing taxes.
There’s a lot to think about when tax season rolls around. What was my income last year? Can I deduct home office expenses? Will I end up owing money? Should I go to an accountant or do it myself?
That last question is what we’ll solve today. Here are your definitive arguments for DIY and working with a pro, along with the important things to consider.
Do It Yourself
You’re an entrepreneur, a doer, so why not take on tax season yourself? No one knows your finances better than you, and you’re equipped to face the tax challenge head on.
There are some good reasons to consider doing your own taxes – namely:
It’s more affordable. Tax professionals aren’t cheap and every fee you pay to a pro comes directly out of your refund, a.k.a. it’s using up money that could be going back into your business.
It’s manageable with online software. The do-it-yourself option is definitely gaining ground, as evidenced by the abundance of software solutions available to help you do it. Tools like TurboTax, H&R Block, and TaxAct can make it quick and seamless to upload forms, find deductions, and file.
There’s plenty of information available to help. The internet abounds with tons of resources to help you file taxes on your own. Not to mention, you can even consult with a tax professional through some of the more popular online solutions.
The Case for a Professional
If you’re thinking it sounds like a lot of extra work to file your own taxes, you’re not wrong. There are some compelling reasons to work with a tax professional, too.
Maximize your refund. A professional tax accountant knows the world of the IRS intimately, frontward and backward. That means he or she can find deductions and credits you may never have even thought of. It also means a fatter refund check for you.
Lower risk of mistakes. Your taxes are no place for mistakes, and working with a professional means things are less likely to slip through the cracks. The last thing you need is an audit to pull you away from working on your business.
Less stress. At the end of the day, it’s simply less stressful to hand off the tax filing to a professional. You can sit back and watch the deductions add up without worrying about making a mistake or missing out on valuable credits.
What to Consider
There are some important benefits to both sides of the argument, so how do you decide? If any of the pros listed above make it a no-brainer, that’s great. If not, here’s what you should consider in making a tax decision.
WHAT WAS YOUR INCOME LAST YEAR?
Experts (biased as they may be) recommend anyone with annual earnings above $57,000 should work with a tax professional.
HOW COMPLICATED IS YOUR FINANCIAL PICTURE?
If you have one job and don’t own property, that’s an easy portfolio to manage by yourself. As you add additional streams of income, itemized business deductions, investments, real estate, and other factors, things start to get a lot more complicated – and fast. If your finances have a lot going on, it’s probably best to work with an accountant to ensure nothing slips through the cracks.
DO YOU HAVE EMPLOYEES?
Hiring your first employee is a big step for your business. It also throws a big wrench into your tax situation. From retirement savings to Affordable Care Act regulations and how your business is classified as you grow, employees are a big hint that you should consult with a professional before filing.
HOW FINANCIALLY INCLINED ARE YOU?
Are numbers your thing? Does just the word "accounting" send chills down your spine? If so, do not pass Go – head straight for a tax professional. Between the added stress of dealing with your finances and the risk of making a mistake, you’re simply better of getting some help.
What’ll it be?
At the end of the day, we always recommend erring on the side of caution, especially when finances and the IRS are involved. If you’re still unsure about what to do, consider sitting down with a tax professional or at least choosing an online solution where you can consult with someone on any questions or concerns that come up.
For more tax season help, check out these resources:
And just for fun...