What is the main difference between tax preparation and tax planning in a small business? And how to hire the best tax consultant?
What is the main difference between tax preparation and tax planning in a small business? And how to hire the best tax consultant? Please suggest!
Tax preparation is a service that helps you file your tax returns. The main goal is to make sure your tax reporting complies with both federal and state tax laws.
Tax planning is a service that helps you optimize your tax situation before reporting. The purpose is to use legitimate ways to optimize your potential tax consequences based on your goals and plans for future.
You should hire a tax professional if you are short on time, are unsure how to file your taxes correctly, or feel overwhelmed by IRS forms with preparing your taxes. Tax professionals can help answer tax questions that you may have and even resolve most tax issues you may have.
The tax code can be very complicated and if you are unsure on how to handle your tax matters, a tax professional can assist. For example, a tax professional can help reduce the risk of any audit and know how to deal with the IRS on your behalf if you do end up being audited. Tax professionals can also help taxpayers avoid making costly mistakes on their tax return such as missed deductions or triggering an IRS letter. Tax professionals can also review previous tax returns to see if there were any errors and needs to be amended.
Individuals searching for tax assistance should follow these steps in order to find a tax professional who best fits their needs:
- Confirm your preparer has a tax identification number (ITIN).
- Make sure to confirm tax fees to ensure you are not being overcharged.
- Avoid tax preparers who do not e-file tax returns.
- Make sure that your tax preparer signs their name and provides their Preparer Tax Identification Number (PTIN) on your tax return.
- Make sure your tax professional can respond to the IRS. Enrolled agents, CPAs and attorneys that have a PTIN can represent you when it comes to IRS audits, payments, and collection issues.
