What Are Tax Preparation Services?
Tax Preparation Services
Certified Public Accountants (CPAs) and other tax preparers mainly offer expertise in tax consultations. Most of the accounting and tax preparation services include various other business support services too. The primary role of a tax preparer remains to offer advice on taxes to its client on compliance and reducing the tax liability legally.
Who is a Tax Preparer?
A Tax Preparer is an individual who analyses, calculates, and files tax returns for clients. Tax preparers offer their services to individual clients and businesses. They have extensive knowledge of tax laws, statutory regulations on taxes and experience to file the tax returns on behalf of their clients.
Tax Preparers can be categorized into credential and non-credential categories.
Credential Tax Preparers are the ones with accredited qualifications and memberships from Internal Revenue Services (IRS) or State boards. These qualified and accredited professionals include:
- Certified Public Accountants – CPAs
- Enrollment Agents – EAs
- Tax Attorneys or an Unlimited Rights holder Representative
Non-Credential Tax Preparers do not hold any certification or accreditations from institutes like AICPA. These tax preparers are usually tax accountants and specialists with expertise in tax filing with knowledge through training.
What is The Role of a Tax Preparer?
Credential tax preparers like a CPA can handle your complex tax issues. CPAs represent their clients with IRS from tax preparation, filing, and appeals. They are certified and possess skills in accounting and taxation. The primary role of a tax preparer like a CPA remains the tax advisory service.
However, including both individuals and businesses, the role of a tax preparer may include broader financial advisory services too. A qualified and skillful tax preparer will offer core expertise in strategizing the tax plan for your businesses.
Some key areas of advisory from a tax preparer include:
- Advice on Entity Structure
- Tax Audits and analyses
- Business financial advice on issues like collections and payables
- Advice on estimated taxes
- Employment contribution plans and tax impacts
- Filing tax returns
- Appeals with the IRS
Broadly speaking, each financial and accounting practice of a business impacts the tax returns. The role of CPAs does not limit to tax calculations only. Unless you don’t work collaboratively with your CPA, you can’t formulate an effective tax strategy.
Number crunching seems fun, but when it comes to tax returns, these are daunting tasks. The role of tax preparation services is to take you through the imbroglio of the complexity of tax issues. Businesses, in particular, need to follow particular rules regarding every financial decision.
What Are The Tax Preparation Services?
Qualified tax preparation services include several categories from taxation to financial advisory. The services include a range of tasks such as tax preparation, tax credits, and deductions, advice on capital gains, etc.
Partnering with a qualified tax preparer like an industry specialist CPA can offer added value to your business. You should expect good value for money on some core services offered by CPAs.
Your business tax strategy starts with the right entity formation. Industry specialized CPAs can offer specialist advice on the correct entity set up. The accounting records and asset valuations, depreciation, employee plans, and other important financial decisions will impact your final tax returns.
A tax preparation service begins with a strategic plan for their valued clients.
This is the primary task assigned to the tax preparers. You wouldn’t want to pay a tax penalty to the IRS with miscalculations and late filings, would you?
A few mistakes on carryovers or carrybacks can lead you to a 20% penalty from the IRS. So, better to leave the task to experts.
Deductions and Credits
This is where practically your tax liability is reduced. But you can’t randomly adjust for deductions and credits. For example, you need to file correct estimated taxes based on the data available. The refund filings with estimated taxes or advance premium tax credits must closely match your annual income returns.
This is where you’ll get the difference and premium services from accredited tax professionals. An industry specialist CPA will offer a comprehensive financial advisory service for your business. The advisory services take the role of a virtual CFO here for your business.
Your business will need IRS representation in many situations. Tax filing and delinquent filings often require IRS representations. A qualified CPA and tax preparation services will represent your business with the IRS. However, the job is more often performed by the tax attorneys.
Do Tax Preparation Services Offer Only Tax Advice?
The role of tax preparation services requires a strategic business partnership. The layman’s concept of reducing tax liability with number-crunching has gone obsolete long ago. The modern tax preparers will lead you through every aspect of business that affects your tax planning. Tax filing remains only one important part of the strategic partnership.