10 Reasons You Should Hire a Tax Professional
Entrepreneurs are a rare breed who start their own businesses – and then often think they should do everything themselves.
But being your own marketing team, legal counsel, assistant, HR, payroll, and accountant can become quite exhausting — and accounting is too important to get wrong.
In the business of saving you time (and heartache), we’ve put together a list of 10 reasons why you should hire a professional to do your accounting:
1. Business Taxes Vary by Structure
If your business is a Sole Proprietorship, C corporation, or single-owner LLC, your business taxes are due on April 18th, 2022. That’s the same deadline as your personal tax return (cue horror movie music), however, if your business is a Partnership, S corporation, or multiple-member LLC, the last day to file business tax returns was March 15th, 2022! And the tax technicalities vary by business structure as well, right down to which form(s) to submit (cue more horror movie music). Sorry!
2. Business Taxes Vary by State
If all of that already sounds like a headache, it gets even worse. Certain states won’t have a corporate income tax, but some will levy a franchise tax or a gross receipts tax. (Yes, business structure matters too… and state tax codes do change.) Yes, it’s a lot to keep track of, and you already have your hands full, we hear ya!
3. W-2’s, 1099-NEC, 1099-MISC
Business owners have to fill out several forms that sound like alphabet soup with a side of numbers. Each form has a specific purpose and deadline for reaching your employees and independent contractors (usually January 31st). It’s much simpler to work with an accountant who knows all about the forms and deadlines.
4. Procrastination is Expensive
Entrepreneurs want to save money by maximizing deductions, right down to deductions for the WFH dining table or couch. Unfortunately, it’s too late to maximize deductions right before taxes are due. Hiring professionals helps maximize your deductions as they occur, so you can save as much as possible.
5. Financial Planning
Accountants help you play the long game by creating a sound financial plan. They can also help determine whether your business should be structured as an S corporation, C corporation, LLC, or sole proprietorship.
6. Business Health
We all know the importance of regular medical checkups and bloodwork to track our health. So we should start looking at accountants to do the ‘bloodwork’ for the health of your business. They know exactly what to look for, and they can expose hidden costs and track profits so you know how you’re really doing.
7. Budgeting
Accountants can create realistic budgets for your business and help you understand which budget items are inelastic and where you could cut down if needed. This is particularly helpful when the world goes economically upside down à la 2008 or COVID.
8. Good, Bad, and Ugly Projects
Accountants can expose what’s working and what isn’t. Knowing which marketing strategies, products, and services are profitable (and which are sinking like the Titanic) can help you invest your time in profitable projects and pivot away from floundering ones.
9. “An Ounce of Prevention…”
You know the saying. Accountants know exactly how to file business taxes accurately, and the rest of us don’t, plain and simple. Filing business taxes on your own might seem cheaper (notwithstanding frustration and headaches), but accounting mistakes can trigger anything from an IRS audit to bankruptcy. Entrepreneurs are good at taking risks, but these risks are simply too great.
10. Leave the Minutia to the Experts
If you’d wanted to get bogged down in the whirlwind of collecting receipts, generating spreadsheets, and keeping up with arbitrary tax codes… well, you might have been an accountant. Having an accountant lets you spend your time doing what you’re good at while leaving the taxing details to the tax experts.
Because to be completely honest, you have better things to be doing.