Planning For Your Future

Posted on: 18 August 2021

Businessmen and women need an acute understanding of the workings of the tax system to prevent tax non-compliance issues. Typically, a business's taxes depend on the federal, state, and local taxes applicable to the business's geographical location and the adopted business structure. Thus, a business's tax returns depend on if it is registered as a sole proprietorship, a limited liability company (LLC), corporation, or partnership. Moreover, most business owners are better off focusing on immediate and strategic issues rather than spend most time handling tax returns that they can outsource to tax preparation services. Below are some reasons why hiring professional tax preparation services is important for a business's survival and growth.

Access to Tax Preparation Expertise

The primary reason businesses hire professional tax preparation services is for their expertise on tax matters. Agencies offering tax preparation services have experienced tax consultants, lawyers, and accounting experts to help businesses handle their tax issues. Tax preparation services specialize in handling back taxes, filing timely returns, and handling IRS notices on their client's behalf. The tax consultants and lawyers working with tax preparation services are competent and astute in tax laws from the federal to the state and local jurisdictions. Thus, tax preparation services have experts best suited to manage a business' tax affairs. Moreover, businesses should outsource tax management to tax preparation services, given how costly mistakes can be when recording and filing tax returns.

Keeping Updated Books and Preparing for IRS Audits

Tax preparation services also help businesses prepare for IRS audits. Usually, the IRS selects businesses for audits through random selection, computer screening, and related examinations. Once the IRS selects a business for an audit, they notify them via mail. Generally, the IRS focuses on the last three years of business records. Thus, businesses should consult tax preparation services to ensure all documents are organized well with no errors. The tax consultants and lawyers are experienced in preparing for IRS audits and help businesses avoid tax non-compliance liabilities. Businesses that fail an IRS audit face numerous consequences depending on the severity, including fines for back taxes and jail terms for fraud. Thus, the top leadership should ensure their businesses are tax compliant.

Increasing Profitability Through Tax Deductions

Unlike tax evasion that is illegal and attracts hefty legal penalties, tax preparation services assist businesses in tax avoidance. Tax evasion uses illegal techniques like underreporting of returns and falsification of tax accounting. On the other hand, tax avoidance exploits legal avenues like claiming all allowable credits, exemptions, and deductions to pay the least legally allowable tax possible. Thus, tax experts from professional tax preparation firms help businesses identify and request their allowable deductions under the law, increasing their profits.