One of the most important keys to success for your business is accurate and efficient tax preparation. As an area with so many regulations, guidelines, and caveats, correct preparation and execution is critical. Small business owners are often focused on multiple aspects of the business simultaneously. Therefore, it’s important to know how to find a CPA (Certified Public Accountant) or obtain digital accounting software to manage your business tax preparation. Mistakes in tax preparation can be very costly to your business, so having a professional on board to get it right the first time around is critical.

Many small businesses owners assume it is a simple process to hire and find a qualified CPAs to prepare their income taxes. But how do you know which CPA to use? Hiring a CPA can be very expensive. With the changes in consumer perception about working online, perhaps you’ll want to consider alternatives such as a virtual CPA platform or a web-based, DIY tax preparation service.

This comprehensive guide will give you all the information you need to make the right tax decisions for your business, so you can file your taxes without breaking the bank.

 

5 Best Available Options:

Based on your business needs and price point, there are several options to consider for small business tax preparation services. The list below provides an overview of some of the five most common options for tax prep.

1. DIY/Online

The digital age has ushered in a slew of online tax preparation services that utilize either software or web-based platforms to prepare taxes for individuals or small businesses.

Small business owners can do some of the tax preparation on their own, but may require some guidance, can benefit from digital tax preparation software. TurboTax is perhaps the most widely used software, while other great options are offered by H&R Block, TaxAct, and TaxSlayer. Many individuals and small businesses will utilize these products to complete their tax returns.

2. Tax Prep Franchise

As opposed to starting their own firms from scratch, some CPAs choose to operate an establishment of a larger tax prep franchise, such as H&R Block and Jackson Hewitt Tax Service. The benefit of using a tax prep franchise is that they function under the umbrella of a larger network, providing each establishment with resources for strong customer service. This option will give you the benefits of a national or large-scale franchise, while at the same time, the relationship of a local establishment.

3. Virtual Tax Prep Platform

If you are looking for the personal feel of a live CPA while limiting your costs, a number of online platforms, such as Taxhub, Visor and TaxFyle, offer live consultations with CPA’s without formal commitments. This option would be ideal if you can prepare the bulk of your tax returns independently but wanted to consult with a tax professional to answer specific questions or address concerns.If you are looking for the personal feel of a live CPA while limiting your costs, a number of online platforms, such as Taxhub, Visor and TaxFyle, offer live consultations with CPA’s without formal commitments. This option would be ideal if you can prepare the bulk of your tax returns independently but wanted to consult with a tax professional to answer specific questions or address concerns.

4. Mom & Pop CPA Shop

If you own a small business, CPA’s who run their own practices may be ideal, as they seek to build personal, lasting relationships with their clients. CPA’s are trained and licensed to offer accounting services to both individuals and businesses. Some CPA’s may specialize in taxes – these are ideal when hiring an accountant specifically for tax preparation purposes.

CPA’s operate in different settings. Many operate as sole proprietors in “mom and pop” firms who are perfect for smaller businesses who don’t want to pay the costly fees for a larger firm. These firms usually have only one office, and most of the time consist only of the CPA, with an occasional office staff member. The CPA is the business, and this can lead to easy, direct communication with the CPA.

5. Full-Service CPA Firm

Larger businesses, or businesses with significant accounting needs, may require the services of a larger accounting firm. These firms can be regional or national and can have anywhere from tens to thousands of employees.

While these firms are the certainly the most expensive, they are most equipped to handle all the needs of large businesses, and to handle complicated and unique circumstances that may arise.

 

Cost of Services:

 

Your budget will play a large role in the tax preparation service you select. Prices for accounting services can vary considerably, and while it’s important to stay within your budget, skimping on this important task can prove to be costly and sometimes spending more upfront can save you thousands in tax costs.

DIY/Online tax preparation services are the most cost effective, ranging from $50 to $100 depending on the size and nature of your business. However, you are putting considerable trust in your own ability to fill out the forms and provide correct information. Consultations using virtual CPA platform will cost you somewhere between $300 and $600, but this depends on the number of consultations you will need to address the matter at hand.

Options that involve working directly with a live CPA will be more costly. A tax prep franchise can complete your business tax returns for approximately $400 to $800. Mom & Pop CPAs will either charge an hourly rate of around $100 per hour, or may charge a flat fee which can range from $600 to $2,000, depending on the size and other characteristics of your business.

Full-service CPA firms are undoubtedly the most expensive. If you own a large, national company and want to higher one of the “big four” accounting firms (KPMG, Deloitte, Ernst and Young, and PwC), you could be looking at a price point upwards of $300 per hour. Other large firms, not as renown as the “big four”, often charge rates above $150 per hour. Hourly rates of smaller firms can vary, depending on their market and the nature of the client.

 

Quality of Service:

 

You’re looking for the price of a digital accounting service, but also want the connection of a live CPA – how do you make the decision? Weighing the pros and cons can be helpful in determining what is best for your business.

The obvious benefit of using digital accounting services is the price. Since you are either purchasing software or utilizing a web-based consultations, the costs are far lower than having a live person spend hours combing through your financials. That being said, finding a CPA and hiring one has its own benefits. Paying those hourly fees gets you a (hopefully) seasoned professional who can find your business important tax deductions that software may not pick up. Sometimes your business may have unique circumstances that can be difficult for software to manage. In addition, if anything goes awry, you have the comfort of knowing there is a live person you can speak to who is fully devoted to your business.

 

The Verdict: It Depends

 

As with all business decisions finding the appropriate tax preparation method is a bit more complex than just finding the cheapest option. The below matrix considers both the size and structure of your business with your business’s budget and quality needs.

 

Bonus: How to Find a Great CPA

 

Before you begin your search for a CPA, you need to make two important decisions: 1) Your budget for tax preparation; and 2) Whether you require an “in-person” experience. The infographic below can help you narrow down your choices based on your requirements.

If your budget is low, you will likely need to consider digital accounting services or software. If you want to build a relationship with a live, tax-specialist who will come to know you and your business on a personal level, you would be best served by seeking out a local CPA who specializes in taxes. It’s important to make these determinations beforehand so you don’t waste time on a particular tax-preparation option, only to find later that it exceeds your budgetary limitations or doesn’t offer the personalized services your business needs.

Once you know the direction you want to take, here are some practical steps that show you how to find a CPA or digital CPA service for your business tax preparation needs:

 

1. Referrals

Speak to friends, colleagues, and local businesses and ask them if they use a CPA to prepare their business taxes. A referral from a trusted friend can be far more valuable than hours of research. In particular, if the referral comes from someone who owns a business of a similar size and nature to your own, you can be more assured that the referred professional will suit your business well.

2. Web Search

Start off by searching for “CPA + [your city]”, for example “CPAs in Scranton, PA” or “tax specialist CPA Scranton, PA”. This will provide you with some strong, preliminary options. Make sure to read Google reviews or reviews on other sites such as Yelp or Angie’s List.

Alternatively, you can search for “digital tax preparation services” or “online tax preparation” to start researching digital platforms that can meet your tax preparation needs.

While you don’t need to select an option from the top of the search results, these options are usually heavily trafficked and have made efforts to enhance their SEO (search engine optimization), meaning, many people access their website and they make efforts to get to the top of the search results. Not that you need a match from the top of the list, but these companies have made strong efforts to be there, which means they care about their business. If you’re having trouble finding options, try browsing the database provided by CPApowered.org.

Once you’ve identified some potential options, browse their website carefully. Is the website updated and modernized? Are there client testimonials? Does the website clearly explain the company’s services? The website is the digital representation of the company, and a strong website is often reflective of a strong business with high quality services.

3. Engage with the Company

When you’ve narrowed down your list to two or three finalists, call each one to discuss your business needs and to learn about their services. It’s important to ask them questions to learn about their services offered, business style, and customer service.

Some sample questions include:

• What is your financial and accounting background? (i.e. training, degrees, years in the business, and prior experiences)
• How do you build and maintain relationships with your clients?
• What stands out about your services and offerings in comparison to other accountants?
• What would you do in the event my business is audited by the IRS?
• What do you need from clients in order to provide the best possible service?
• What happens if there is an error in my tax returns? How would you rectify the situation?
• What type of fee structures do you offer? It is important to get all fee information in advance.

You will also want the CPA to provide references (if you don’t already have).

If you are taking the digital route, see if you can obtain a demo of the software. Is it easy to navigate? Will the software meet all your business needs? You may also want to call up the company’s customer service to talk to someone directly about the software (it’s important to see how easy it is to connect with a live customer support representative).

When you connect with customer support, here are some questions you may want to ask regarding digital software:

• Have there been any recent technical glitches?
• How does the software support different types of businesses?
• How can I be certain that the software will account for all the necessary deductions and specifications of my business?
• What happens if the software makes a mistake?
• Is there live, 24/7 customer support? What support formats are offered? (i.e. phone, email, live chat, etc.)

The interview is arguably the most important step in the process of selecting a CPA or tax preparation software for your business. It’s your opportunity to look beyond the website and get into the real specifics regarding how the company operates. Making the wrong choice can be a costly error – asking the right questions ahead of time will help ensure you’ve made the right choice for your business.

With small business owners stretched thin to keep their businesses operating smoothly, finding the right help for tax preparation is critical. Following these steps will ensure you find the right tax preparation option for your small business. To schedule a call with a CPA at Taxhub click here or download our info-graphic guide here.