The question in small business always seems to boil down between the trade-off of time and money. This rings true during tax season as well as the rest of the year when you are conducting any type of fiscal matters. You feel that you are good in finance and do your own personal taxes, so why not have a go at the tax returns for the business?
Well, it really comes down to the complexity of your business. Before the advent of software like TurboTax, TaxSlayer and others, the idea of doing your own taxes with pencil and calculator was too laborious and prone to error. Even with the simplicity and ease of these tax products, it still really comes down to how detailed your business is. Let’s look at the reasons why you should and why shouldn’t use a professional.
Hire a Professional:
If you operate a retail operation or sell products online and have a lot of inventory as well as equipment and property, you should seriously consider paying a pro to handle your taxes. Even if you’re a veteran at doing your personal taxes, the sheer amount of time you can save by hiring a tax pro is probably worth the expense.
Things also tend to get complicated when you have employees. Rule of thumb is that if your business is anything other than a sole proprietorship, get an accountant. In addition, you should probably either hire a bookkeeper or outsource a company to do your payroll. This is tedious and time consuming and best left to the professionals. Employees also add an additional level of record keeping and complexity that should be the full-time focus of someone other than yourself.
When in doubt, hire out. If you even have a modicum of fear in finance or accounting, it is worth every penny to keep your books straight and taxes correct. Go with a pro.
When not to hire a Professional:
There are very few instances where saving money by doing your own taxes makes sense for small business. With that said, if you are experienced with personal taxes and tax software, and your business is a sole proprietorship, you can save by doing your taxes yourself. Always remember, that regardless of who does your taxes, you are still on the hook for any errors that arise from your bookkeeping or reporting.
The workforce is changing in how it conducts business as well. When the labor market was difficult, people began working part-time and side-gigs to make ends meet. This niche in the marketplace has grown enormously. Everything from being a driver for Uber to freelancing on the web, individuals are working as non-payroll 1099 employees. If you are one of them, there essentially is no reason you cannot do your own taxes if you normally do them.
The 1099 is just considered additional income, and you can simply add it in the appropriate spot on TurboTax or whatever software you use. If you hire non-payroll workers, you must keep records of their time and give year-end statements to them for their taxes and use as well for your own. If you are using this type of worker, your business probably already demands an accountant for your taxes. As mentioned, you probably innately know whether to hire a pro for your business or not. Use these guidelines or get a consultation from an accountant or a professional at the SBA’s SCORE. It will make you feel better.