Need a lifeline? When your business might need a tax professional

Dustin Johnson
By Dustin Johnson

Is your business starting to feel like just preparation for one tax deadline after another? Stepping off your horse to worry about organizing your finances and paying taxes on time can hinder any momentum you worked hard to build. If you feel this is true, it may be time to consult a tax professional.

After all, you didn’t get into business to worry about finances all day (unless you’re an accountant). You’re in business to make money and offer your market a valuable product or service.

We’ll venture that you’re here because you’re still considering hiring a tax professional. You’re almost sure you could benefit from it, but you’re not 100% sure if the juice is worth the squeeze.

Do I need to hire a full-time accountant?

How much is my time actually worth?

Am I better off staying lean and doing this myself?

These are all questions we’ll attempt to help you answer. Let’s get into it.

Life events make this year busier than last

Take a step outside of our business for a second and think about recent events in your life. You'll have less time if you’re busier this year than last. This disparity means you need to make that time up somewhere to at least have the same productivity in your business. 

  • Did you or a child get married?
  • Are you taking on more responsibility at church, your kids' school, or at home?
  • Are you continuing your education formally or informally?

It’s easy for little bits of time to add up unnoticed. Then, suddenly everything comes to a head, and you realize you’re completely overwhelmed. Instead of letting this happen, give some deep thought to how much extra time you have to devote to taxes. If you don’t want to sacrifice time away from kids or your business, then hiring help for your taxes can help you buy back some time. 

Your business got more complex

Is there an extra layer of complexity in your business this year compared to previous years? If yes, your business may have surpassed your DIY ability to file taxes properly. You see, time and money aren’t the only factors to consider. Also, consider that you need to file a tax return that’s as accurate as possible. The IRS tolerates mistakes, but if you make too many, you could open the door to penalties and an audit.

Did you or your business make any of the following changes the previous year?

  • You purchased a rental property
  • You secured a sales permit/sales tax certificate
  • You relocated your business
  • You started selling across state lines
  • You hired employees
  • Your income increased significantly
  • You purchased a new business

Your time is worth more than the cost of hiring a professional

As a business owner, you should be keenly aware of how much your time is worth and how much of it you have to spare. Knowing these numbers makes it easy for you to decide if you want to do your taxes yourself or not.

Let’s work through a theoretical example.

  • Let’s say your time is worth $100, meaning you average $100 of revenue per hour worked.
  • According to the IRS, the average business owner takes 23 hours to prepare their tax return.
  • If you add it up, you lose $2,300 in revenue by doing your taxes yourself.
  • The average cost for a tax accountant is $470, meaning doing your taxes yourself means $1,830 in lost revenue.

These figures don’t include the money you could save from hiring a professional. More on that later…

You’re not the best with finances

Step one in filing your tax return is knowing your key financial metrics. The two main ones are revenue and profit. A tax accountant can take these two numbers and help you break them down further to find possible deductions. Doing this yourself can take time and is easy to mess up.

Let’s face it.

If you’re having trouble tracking your finances, adding a tax return to the equation is a bad idea. Many business owners cobble together their tax returns at the last minute every April, but that’s not always enough. Something unique to business owners is the requirement to pay estimated taxes.

You want to save money

We already did the math on the time cost of doing your taxes yourself. Have you ever considered how hiring a tax professional could save you money? A tax accountant can analyze your business and apply expert tax-planning strategies that save you money year after year.

The more your accountant knows your business, the more tax savings they can extract from your annual return. This means you should establish a relationship with a tax accountant sooner rather than later.

Take your business and taxes seriously

Our stance: If you have any reservations about your ability or availability to do your taxes properly, consider hiring a tax professional. Most business owners are surprised by how affordable hiring a tax accountant actually is. Even better is the likelihood that hiring a tax professional can save you money through deductions and credits.

If you like the idea of saving time and money on taxes, then hiring a tax professional isn’t the only way. In addition to working with an accountant, business owners use a tool called ComplYant to take the guesswork out of tax budgeting and tax due dates.

Dustin Johnson
By Dustin Johnson
Dustin Johnson is a Senior Tax Research Specialist at ComplYant. Prior to joining ComplYant, he spent over eleven years performing tax research at the world’s largest tax preparation company. Dustin holds a Bachelor of Business Administration and a Juris Doctor. Outside of work, Dustin enjoys biking and spending time with his family.

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