Every business owner faces the question at one point or another: Should I do it myself or hire a professional? This is especially true of tax processes, where the smallest of mistakes can result in significant, business-altering consequences. While constant advancements in tax software have made these programs indispensable to businesses in all industries, CPAs and other tax professionals are still in high demand. If you’re deciding between doing your own business taxes and hiring an accountant, consider the advantages of both software and professional tax prepare
The Advantages of Tax Software
If you’re looking for an inexpensive, quick solution to your small business tax woes, investing in a tax software program could be the optimal solution. Most tax software programs are equipped with in-depth tools and helpful resources. Couple that with an online tax bracket calculator, expense-tracking apps, and the copious selection of 3rd-party tools and resources, and your tax-filing endeavor will be significantly easier.
- Cost-Effective
Investing in a tax software package will always be less costly than hiring a CPA or qualified tax professional. The cost of tax prep software ranges; you can find free software or purchase programs that run upwards of $200. Whichever program you choose, it’s apt to be cheaper than hiring the services of a professional for just a single hour. According to The National Society of Accountants, the average cost of hiring a CPA to file a Form 1040 with state return, Schedule A, and Schedule C was $457. If you’re looking for a budget-friendly solution, tax software is the answer.
- Simplicity
The right professional tax preparation software makes business taxes easy. Reputable programs will walk you through the process, laying out technical jargon in easy to understand terms, providing all of the essential forms, and helping expedite the filing process. If your small business files few deductions and you don’t need advice about creating business plans or legal structure, your business likely isn’t in need of a professional accountant quite yet.
- Speed
Once you’ve compiled all of the essential documents, tax software makes it easy and efficient to complete your own taxes—often in less than just a few hours’ time. Compare that to an accountant’s preparation services; a tax professional will usually require anywhere from a few days to a few weeks to process your paperwork and file your forms. If time is of the essence, tax software could be the right move.
The Advantages of Hiring an Accountant
While tax preparation software options provide numerous benefits, hiring an accountant comes with its own set of advantages.
- A Working Relationship
Working with an accountant means developing a relationship. Over time, your finance professional will become familiar with your business’s financial situation, and may provide invaluable advice to help you reach financial goals. Have a question? There’s someone on your side to help. Bottom line: Tax professionals can suggest tax steps that a software program simply can’t provide.
- A Resource for All of your Financial Questions
With an accountant on retainer, you have a go-to resource year-round, whether your questions are about filing your taxes or other financial endeavors. Wondering how to file a tax extension? Need to know how to set up a business IRA plan for your employees? Having an accountant to call on any time can provide peace of mind—something every small business owner could use a little more of.
- Less Responsibility
Business taxes tend to be more complicated than personal finances, and if you’ve found yourself confused about filing processes and investment opportunities, it’s worth it to enlist the help of a professional.
In most cases, it’s not a question of skill; you may have the financial acumen needed to sort through taxes on your own, but do you have the time? Handing off important tax documentation processes to a trusted accountant can free up your time, allowing you to invest your hours where they’re most needed. Even if your tax situation is relatively simple, hiring a professional can save you the stress of doing your own filing.
There’s no single right answer when it comes to your small business taxes. For some entrepreneurs, it makes more sense to take advantage of a professional tax software program; for others, hiring a professional provides peace of mind. Reflect on your own familiarity with IRS regulations, and consider the complexity of your business finances before making a decision. If you’ve decided it’s the right time to outsource your accounting processes, use referrals and check reviews to ensure you hire a professional you can trust.
