How to choose a tax advisor for your business

If you choose to use a tax advisor, it is important that you find a qualified tax professional. You are ultimately responsible for everything on your return even when it's prepared by someone else.

If you are starting a new business or are just thinking about it, talk with a tax professional who knows small businesses. Some tax professionals specialize in specific business types, like sole proprietors, partnerships, limited liability companies (LLCs), S-Corps, or corporations. A knowledgeable preparer will ask you multiple questions to identify your small business taxation issues. Keeping good records will help your tax advisor when it comes time to file your return. Your income records and receipts determine your total income and your qualifications for expenses, deductions, and credits.

Most tax return preparers are professional and honest. Here are some tips for choosing a good preparer:

Avoid preparers who claim you do not have to make estimated taxes or that they can obtain larger refunds than other preparers, or those who say they know ways to help you claim personal expenses like the cost of your home or your children's education.

Choose a preparer who will be responsive to your needs and provide year-round service.

References are very important for a tax professional who is handing your business. Ask questions and get references from other small business owners who have used the tax professional before. Were they satisfied with the service received? Get more than one reference.

Check to see if the preparer has any questionable history with Experian's business credit reports, the Better Business Bureau, the state's board of accountancy for CPAs or the state's bar association for attorneys. Find out if the preparer belongs to a professional organization that requires its members to pursue continuing education and also holds them accountable to a code of ethics.

Does your state have licensing or registration requirements for paid preparers? Is he or she an Enrolled Agent, Certified Public Accountant, or Attorney? If so, the preparer can represent taxpayers before the IRS on all matters – including audits, collections, and appeals. Other return preparers can represent taxpayers only in audits regarding a return signed as a preparer.

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This information provides a brief overview from the Internal Revenue Service of issues and decisions involved in owning a small business and avoiding common pitfalls.