Tax Thursdays: When and how to hire an accountant

Welcome to the FreshBooks Tax Thursdays series! We know a lot of small businesses struggle with taxes, so we’re hoping to help make it a little easier by featuring advice from leading accounting professionals every second Thursday from January to April. Today we hear from Mariette Knoblauch on what to look for when you hire an accountant to help with the taxtime crunch.

Does this scene sound familiar: You look down at the pile of paperwork representing everything your business did last year, up at the screen with TurboTax, back at the pile and you begin to wonder if you might ever get through your taxes. Letting someone else try and make sense of it all can help but you don’t necessarily want to go to the first place you see. How do you find a good accountant to do your taxes? Here are some questions to ask if you have begun interviewing folks to straighten out your books:

Who should you ask for help?

First, look for how much of the alphabet they have after their name. CPA stands for certified public accountant and it means he or she has passed difficult tests to demonstrate their professional skill. Not all CPAs do taxes, though. You want to find one who specializes in taxes for small businesses, not a moonlighting auditor. This will typically be your most expensive option, and may be more than some people need.

What do those other letters stand for, can they help me?

An EA, or enrolled agent, has passed tests showing their tax knowledge. They are often former IRS employees, and like CPAs and attorneys can represent you before the IRS. This year the IRS is introducing a new designation, Registered Tax Return Preparer (RTRP). RTRPs will need to pass a competency test on tax preparation. For now tax preparers who are not CPAs or enrolled agents won’t have an RTRP yet, but they do need the most important letters of all – PTIN.

A PTIN, or Preparer Tax Identification Number, is required by the IRS in order to prepare tax returns for pay. Anyone you hire to do your taxes must have one. The IRS plans to make this information publicly available in time but for now the only search tool I’m aware of is from Teaspiller. Your tax preparer, whether they’re a CPA, an EA or unenrolled preparer, must sign your return with this number. Don’t do business with anyone who doesn’t have a PTIN, or won’t sign your return.

How do you test their know-how?

Letters alone don’t guarantee that someone is a good tax person for you. You want someone who also understands your business, is responsive and communicates well. Ask your colleagues who are in the same field for referrals. Are they on LinkedIn or other professional websites? Ask for an informational interview – most accountants will give you a half hour at no charge to talk in general about their qualifications and how they work.

It may seem more expensive to pay someone else to do your taxes but when you consider the time and hassle of trying to figure it out by yourself, and the money a professionally prepared tax return can save you in mistakes and penalties, a good tax accountant is worth the cost.

P.S.: Find more FreshBooks Certified Beancounters on the brand new Fresh Map!

about the author

This is a guest post for the FreshBooks blog. FreshBooks is the #1 accounting software in the cloud designed to make billing painless for small businesses and their teams. Today, over 10 million small businesses use FreshBooks to effortlessly send professional looking invoices, organize expenses and track their billable time.