Do You Need a Tax Preparer or a CPA?

Ben Franklin once said the only things we can be sure about are death and taxes.

If you’re still alive, you know tax time is right around the corner.

And this year you’ll want to make sure you’re filing them correctly due to the new tax code in play, signed into law on December 22, 2017.

If you’re looking for someone to assist you with this new code and your filings, you’ll need to know who you can turn to for support.

So, who’s going to help you file your lawn care business taxes this year?

Rick Miller, CPA, of Miller Advisors in Nashville, TN, states that this year you may want to hire a tax preparer or a CPA to file your taxes because of the new tax code that President Trump signed.

What is This New Tax Code?

It’s the Tax Cuts and Jobs Act of 2017.

The code contains changes to items that may affect your business such as deductions, depreciation, expensing, credits, and fringe benefits.

If you’re questioning the impact of these changes, you could seek more expert advice from a Tax Preparer or CPA… but what’s the difference between the two?

What is a Tax Preparer?

A tax preparer is someone who has a business or accounting degree but is not a certified public accountant.

Tax preparation businesses include: H.R. Block, Liberty Tax Service®, Jackson Hewitt, and so on.

These folks take a yearly course to update themselves on new tax laws and other current tax information that they need to know to file your taxes.

Tax preparers understand federal taxes but are generally not so well versed on state and local taxes.

Also, if the IRS audits you, tax preparers can’t defend or represent you.

And yet, you won’t be hung out to dry in an audit because there are folks at brand name tax preparation offices who will defend you in case an IRS representative contacts you.

If you’re only interested in filing your taxes, a tax preparer may be right for you.

How is a CPA Different from a Tax Preparer?

A certified public accountant (CPA) is someone who has a degree, advanced education and took a state certification exam. “Not all CPAs file taxes either,” says Miller. Some CPAs work with businesses as Chief Financial Officers (CFO), controllers and auditors.

“CPAs partner with you to help you grow your business. We can advise you on software because CPAs understand technology. They can guide a lawn care business,” Miller says.

Miller also names the following benefits for small businesses who hire a CPA:

1. CPAs partner with you to grow your business. They’ll give you financial advice aimed at developing the long-term growth of your company.
2. CPAs guide you on best accounting and billing software to invest in. Business software not only keeps track of money going in and out of the company, but it also provides reports that explain how the money is used. Your CPA can use your reports to advise you.
3. CPAs guide you when to set your business up as a Limited Liability Company or help you retain a federal tax ID.
4. CPAs keep you compliant with the IRS. For example, Miller explained how companies using Square or PayPal must manually download reports for their taxes until they reach a certain level where credit management software automatically sends you the reports. A CPA will remind you to get all of your transaction reports from your credit card processing company—even if it’s only $9,000. You need to report all of the income you earned through credit card transaction companies—even if those companies don’t send you a report for your 1099k.
5. CPAs who prepare taxes are familiar with state and local taxes. They help you to understand these local taxes as well as advise you regarding any changes made at the local or regional level.

Learn more: Here are 12 Must-Run Reports for the New Year

Conclusion

Like every year, tax law is complicated—especially if you own a business.

To save money and time, some lawn and landscape company owners choose to file their own taxes.

And yet, Miller advises that this year, 2019, you should hire a tax preparer or a CPA to file your 2018 tax return.

While on the surface, the new tax law appears less complicated than previous tax codes, it’s still unknown territory. And you need someone who can apply the IRS guidelines regarding benefits, tax deductions, depreciating, and expensing so you can avoid an audit.

Miller explained that when the law passed last year, no one had defined what was included with it or the specifics of the tax cuts. The IRS recently delivered their forms and instructions regarding the new tax law. The new tax code required by the IRS is over 200 pages.

Do you have time to read 200 pages of tax code regarding the new law? No?

Then, go to your local tax preparer or CPA who files tax returns and is familiar with this new tax reporting territory.

Miller also states that even if the U.S. government is shut down, the tax filing deadline is still on April 15, 2019.

So, how will you be filing your taxes this year—through a tax preparer or a CPA?

*This article is for informational purposes only. To find out specifics about filing your tax returns, talk with your local tax preparer or a CPA who specializes in taxes.

Related: How to Build a Recession-Proof Business