5 Legal Reasons to Consult with a CPA on Business Taxes

As an entrepreneur, you may be tempted to skip the confusing and often tedious task of taxes by claiming that your business is a small mom-and-pop shop with relatively minimal earnings. Small businesses are critical to our economy, and come with unique tax considerations that can be difficult to keep up with.

Certified Public Accountants (CPAs) are well-versed in the rules and regulations of taxation and can help you navigate these challenges with relative ease. This article will touch upon the five most important reasons your business should consider hiring a CPA for taxes.

1. Plan Ahead

The tax laws that define your role as a business owner change each year, so you should always consult a CPA before the end of December to receive tax planning advice. With these recommendations in place, you can make important financial decisions regarding the upcoming tax year without fear of subjecting yourself to costly penalties. It’s important to remember that a CPA cannot make tax law changes, but they can help guide you through keeping your company on track within the guidelines set forth by the Internal Revenue Service (IRS) and state governments.

2. Avoid Overpaying

Tax laws surrounding business returns can be confusing to navigate, so it’s easy for entrepreneurs to overpay or underpay what they owe accidentally. In addition, the IRS puts out guidelines on how much you can claim for various deductions, which can be challenging to decipher. Consultations with a CPA will help you understand how much tax to expect and whether or not your business is being over-or underpaid. Additionally, general tax advice from a CPA will explain the implications of your decisions and offer up recommendations for future years as new regulations that affect business.

3. Stay Compliant

Failure to file business taxes is a serious offense that can result in significant fines, an arrest warrant, and even jail time if federal agents catch you. While it’s easy to say that you’ll keep updated with the significant tax updates throughout the year, time constraints can often get in the way of taking care of business. However, it will give you a defense against the IRS if you find yourself in hot water.

4. Protect Your Company’s Bottom Line

Tax deductions are critical to business success. Your CPA can help you maximize your deductions while minimizing your overall tax burden so that you don’t pay more money than necessary. You’ll also need to know how the tax laws regarding retirement plans impact your company’s bottom line, and a CPA can help you save on taxes by crunching the numbers for you. The laws surrounding retirement plans and taxes are constantly changing, so it’s essential to stay up-to-date with the latest changes.

5. Protect Your Company’s Future

Though it may not seem like it at the time, the government’s ability to find you and shut down your business is a real threat. If you don’t pay your taxes, expect the IRS to contact you directly, and they won’t be afraid to play hardball. A CPA can help you defend yourself from impending legal action by helping you prepare for an audit or even filing criminal charges against an IRS employee if they become harassing.

Though you can indeed file your taxes as long as you have a license as a sole proprietor, the number of tax regulations involving business returns alone is enough to confuse even the most meticulous bookkeepers.

A professional CPA can help you protect your business from mistakes and ensure that you are compliant with the IRS. Understanding how tax laws affect your company’s bottom line is essential for long-term success, and a CPA can help you achieve that goal.