Between your business, tax preparation, and family, which one comes first? All these are important. Nonetheless, maybe you’d rather focus on what you do best (running your business) and balance that with having quality time with your family. In that case, engaging an accredited tax advisor becomes a plausible option because you still have to manage your finances and file your tax returns.
Here are some mistakes to avoid when hiring a tax consultant.
- Not Acting on Time
It’s easy to postpone tax preparation due to the complexities involved and the effort and time required. However, not deciding early enough when to involve an expert and what aspects of the process to delegate can cause you unnecessary stress later on. By engaging a consultant on time, you can together develop and start implementing an action plan that suits your financial needs.
- Not Getting Trusted Recommendations
When hiring somebody to help you comply with tax laws, you must consider their reputation besides professional qualifications. Referrals from people you trust, such as friends, colleagues, or professionals in related industries like estate planning lawyers, can point you in the right direction. Be sure to inquire about their professionalism, responsiveness to calls or queries, and communication effectiveness.
- Not Paying Enough Attention to Credentials
Sales representatives working for brokerage or insurance agents have valid roles in the business world. However, they’re not the accredited tax advisors you should seek out for help with tax matters. Instead, look for a certified public accountant (CPA) with months or years of study and standard testing.
- Not Prioritizing Personalized Advice
Decades of experience providing tax advice don’t necessarily make an advisor the right fit for your needs. Sometimes, a younger practitioner with the right credentials and experience working with families or small businesses like yours can offer the relevant insights you require. Here’s a useful resource for researching a prospective accredited tax advisor.
- Hiring a “Lone Ranger”
Taxes are a multifaceted concept that often requires close multidisciplinary collaboration. As such, you’re better off enlisting a tax advisor with access to financial planning, accounting, and other relevant input from qualified and experienced team members.
- Not Asking the Right Questions
You shouldn’t accept a ‘black box’ attitude wherein your tax advisor is unwilling to shed light on their tax preparation process. Walkaway if a prospective consultant can’t answer simple questions like “What changes can I make to improve my tax situation?” Good advisors appreciate that it’s in your best interest to understand what they’re doing and their reasons for it.
- Not Spotting Conflict of Interest Right Away
If your tax advisor is also providing you with financial planning or investment advice, you should watch out for conflict of interest. For example, a consultant shouldn’t encourage you to invest in a business in which they have an interest. Also, a CPA should let you know beforehand if they’re offering the same services to a member of your family, such as your spouse.
Avoid these common mistakes to get the most out of your accredited tax advisor. For more small business tips, contact the experts at Economic Development Collaborative today. We have a ton of resources, including guides on tax preparation, startup financing, and more!