Is it Worth Getting an Accountant to Do Your Tax Work?
Every time tax season rolls around, a lot of people face the same question: is it worth getting an accountant to do your tax work for you? Or can you rely on online tax software?
Doing taxes is unavoidable, and a small mistake can rack up unnecessary fees or leave you paying more than you have to. Of course, many people have used both an accountant and tax software.
Before you file, we want to run you through a few different scenarios to better help you understand your options. Tax season doesn’t have to be stressful; you just need to feel more prepared.
Why Do People Usually Go to Accountants?
Many people go to accountants to save time and avoid the hassle. Having an expert handle your finances ensures that everything gets filed correctly, and the process goes smoothly.
If you have your own business or work as an independent contractor, using an accountant is almost necessary. You won’t get a W-2 from your employer, and you’re usually responsible for tallying up your own payroll taxes.
In this case, you might even need to take a few additional steps before tax season to ensure everything is up to date. Growing businesses often have fluctuating finances, so you may want to find a bookkeeper to keep everything organized before tax season. They will help you keep track of your spending and income so that tax season feels like a breeze.
Tax Software vs Accountant
The biggest question that many people ask is, how much does it cost for an accountant to do your taxes? The answer isn’t always completely straightforward, as it can depend on your situation.
On average, it can cost anywhere from $146 to over $450, which is quite a wide range. However, you should keep in mind that most people fall on the low end of this bracket when filing personal taxes through a tax accountant.
Tax software is almost always going to be the cheaper option between the two. It can even be free for those with simple returns. Basic returns usually cost less than $130, but you can often upgrade your plan for more complicated returns. If you do use tax software, make sure you are using a reputable program that is trustworthy and thorough.
Keep in mind that using tax software can save you some money, but it will not save you any time. If you’re working with anything other than a simple return, tax software might not always provide the attention and detail you need.
When Should You Use an Accountant for Taxes?
Now that we’ve covered the cost of tax software, you can ask yourself: do I need an accountant to do my taxes? Unfortunately, there’s no one-size-fits-all answer.
If you are self-employed or run a business, you can count on needing an accountant.
Additionally, if you don’t have time to figure out the whole tax process, you might prefer using a tax accountant. Many people use accountants to ensure they are getting the most out of their tax returns. Accountants can find deductions that tax software might miss—and you’ve got the benefit of interacting with a human, not a program.
Business vs Personal Taxes
Personal taxes are much easier to deal with in most cases when you have a regular job. By a regular job, we are referring to a position that will deduct taxes from each paycheck, so you don’t have to. That usually makes the entire process straightforward and simple.
When you’re handling business taxes or you’re the employer, the tax situation is a bit more challenging. You have to track your income carefully, pay quarterly taxes, and keep a close eye on those expenses. That is why we suggest taking your taxes to an accountant if you run your own business.
Can an Out-of-State Accountant do my Taxes?
Unfortunately, if you’ve recently moved, you may need to leave your accountant behind. Some states allow CPAs to work out-of-state, but they usually have to be associated with a firm that does work in your state. If you’re not sure, you can always check with the accountant you want to use, or look up your state’s tax law.
What You Should Know About Using an Accountant
Overall, using an accountant is fairly straightforward. They will need your basic tax information, including W-2s, 1099s, or any other forms you will be using to file. From there, most accountants will ask basic questions to figure out the scope of your situation.
The best way to work with an accountant is to get a basic understanding of what they need from you so that the process goes smoothly (and doesn’t take as much time). That can be a bit rocky the first time you work with them, but don’t be afraid to call ahead if you’ve got specific questions in mind. By learning all the details and the steps you will have to take each tax year, you will be well prepared, and their job will be easier.
If your finances are a jumble and you can’t seem to keep up, you may need to consider finding a bookkeeper to join the party. They will be able to keep things straight throughout the year, leaving the accountant with a simple return to file. That will cost you more, but bookkeepers are usually less expensive than a certified accountant.
It’s Time to Take the Fear Out of Tax Season
Tax season is always intimidating, but you shouldn’t let it get the best of you. Take this tax season by the horns and hire a professional.
Obviously, you don’t always need an accountant, but it’s never a bad idea. If you’re usually stressed and confused when doing your taxes, having an accountant on your side can be a serious asset. It’s essential if you have a lot to keep track of with your personal business.
If you’re trying to find a professional that can give your case the special attention it needs, that’s Ledgers. We can help you with business taxes, bookkeeping, payroll, and so much more. We’ll take the stress out of tax season so that you’re not dreading April 15th.