Tax season is a big deal for people all over the world. It can be nerve-wracking and confusing to know where tax law stands, how it affects you, and what kind of tax advisor you should hire.
Tax advisors provide tax advice and tax planning, including tax return preparation, on behalf of their clients. Tax advisors can also assist with compliance matters such as audits, appeals, and collection actions.
To help make tax season less stressful, we’ve put together this list of five things that every person needs to know before hiring a tax advisor.
The Tax Advisor’s Role
When you hire a tax advisor, they will help to guide and direct your tax planning. A tax advisor should provide tax advice and take the lead on tax filing and other related tasks. They can also offer tax planning services such as developing strategies for reducing or deferring taxable income.
Some people are confused about whether their tax advisors serve more of an advisory role or have decision-making authority regarding taxes. This depends on what kind of relationship you establish with them through contract negotiations.
When you hire a tax accountant, it’s important to know that tax advisors can bill for their services differently. Some tax advisors may charge an hourly rate or flat fee. Others will take a percentage of the total return they help their clients earn through tax planning and filing.
Whatever type of billing structure your tax advisor uses is up to them so long as it’s agreed upon before any work begins. When hiring a tax advisor, it’s also important that there are no hidden fees attached after the job is done. Such scenarios could lead to disputes later if something goes wrong.
Your Tax Advisor’s Credentials
When hiring a tax advisor, it’s important to know that they are certified.
There are two main types of tax certifications you should look for: Enrolled Agents (EAs) and Certified Public Accountants (CPAs). Both EAs and CPAs have passed a comprehensive test on tax law in the United States.
In addition to these tests passing scores, both must also meet certain education requirements or work experience. You can find out more about each type by visiting their individual websites.
Your Tax Advisor’s Experience
When hiring a tax advisor, it’s important to know how experienced they are. One way to gauge their level of expertise is by looking at the number of years they have been practicing.
In addition, you should also ask whether your tax advisor has experience working with people in similar situations as yours. This can help ensure you get a better match so that your tax planning goals align accordingly.
Your Tax Advisor’s Network
A good tax advisor should have access to a network of other tax advisors for referrals and backup when needed.
They should also have connections with accountants, lawyers, financial planners, insurance professionals, etc. That way, they can offer their clients more comprehensive services as part of their overall financial plan in addition to tax planning.
Read more here on how to choose a tax advisor.
Hire the Best Tax Advisor
Hiring a tax advisor might seem like an overwhelming process at first. But if you follow these five steps, you are likely on your way towards better understanding how taxes work while saving money where possible year after year.
We hope you found this tax blog useful. For more tips and updates, please keep visiting our website.