As a result, Henn recommends asking people who have similar needs. “For example, if you’re a doctor, talk to other doctors and ask who they use,” he said. If you run a small business, have a tricky tax year, are a new investor or just want to talk with a person face to face, working with a tax preparer or another tax professional may be worth it.

As your business grows, you will interact with more vendors, employees, and customers. Keeping track of your finances is a tad challenging, and not knowing the difference between an accountant, a bookkeeper, and a CPA can make it even trickier. Thus, let us go through each of those professions in detail, understand their definition, and what role they can play for your business. Each year, the IRS compiles a “Dirty Dozen” list of tax scams.

Step three: Interview a prospective CPA

When you meet with a potential accountant, bring a copy of your most recent tax return. Reviewing your latest return is one of the best ways for the tax pro to evaluate your situation and give you an idea of how much they might charge. If you got the tax preparer’s name from the IRS, your state board of accountancy, a state CPA society, or the NAEA, their credentials are most likely legitimate.

You can raise red flags by mischaracterizing one expense—say, advertising—as another expense—like travel—because it might not make sense for your business category. Mixing and matching food and entertainment costs may seem harmless, but those categories are subject to different rules—and then subject to even more limitations in each category. Business meals with clients are subject https://www.bookstime.com/articles/income-summary-account to a 50% limitation, while a company-wide event is likely 100% deductible. Food provided to employees as a taxable benefit is 100% deductible to the company, but office snacks and meals are not fully deductible. They used to be deductible, but the cost of entertaining clients is no longer deductible due to tax reform. That’s the idea that your output is only as good as your input.

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On the other hand, the term “tax preparer” is a catch-all category for both credentialed and noncredentialed professionals who prepare tax returns. The IRS mandates that anyone who receives compensation in exchange for preparing a tax return must have a PTIN, or a preparer tax identification number. If you already work with a financial advisor, you can also check to see if they offer tax planning or advisory services. Paychex Flex Select provides expert service to match your business needs to our solutions. Process payroll, file taxes online, and have access to online employee training and development with 24/7 support.

We offer a comprehensive suite of services to support all of your accounting, tax, payroll and business needs. Our approach enables us to look behind the numbers, so we can offer the personalized support you deserve. Let us tackle the daily tasks, so you can manage and grow your business. Groberg says having multiple checks and balances in place can make the process less scary. For example, at her business, those who do bookkeeping services are not the same folks who file a return—that gets handed off to a preparer. Many taxpayers assume that the busiest folks during tax season are tax preparers—but that’s not always the case.

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As mentioned above, bookkeeping is an administrative and transactional task. Thus the role of a bookkeeper can vary greatly depending on the nature of the business. Henn said he’s worked accounting and bookkeeping services for businesses with many clients who feel funny about sharing their personal financial information with a tax preparer in their own town, so they work with someone in another city or state.

They provide a hassle-free experience for business entity formation and ongoing tax filing support. Many state boards of accountancy and state CPA societies maintain online directories of members or can provide a list of tax pros in your area when asked. Not every CPA prepares taxes, so you may need to do your own research or make a call to see if the people on your list provide the type of tax services you need.