Many people, especially those who don’t work in the finance industry, use the terms tax preparer and tax accountant interchangeably. This is a common misconception. Understanding the difference is helpful when choosing which of the two you need.
While the IRS require tax preparers, defined as someone who file taxes on behalf of clients for a fee, to pass an examination, the barriers to entry are not as steep as that of an accountant. They are not required to pass the CPA.
Tax preparers look backwards, at the year you had, and figure out how to present this information to the IRS to maximize your refund or minimize your bill.
Accounting professionals have an advanced education, typically a CPA, and have a wide range of skills and services. They perform audits, prepare financial statements, assist with financial projections, as well as, many other accounting processes. However, they also are well versed in taxes.
A tax accountant typically views taxes as a year round, strategic aspect of your business or finances. To an accountant, taxes are not something you think about once a year come April.
While tax accountants can look backwards at your most recent tax years and optimize your filing, their best work comes while looking forward. They help you plan for the future and make strategic business or financial decisions that will help you, not just in tax season, but for years to come. They can help your time your income and expenses, they can help you decide when the right time to hire or purchase equipment and they can help you anticipate the taxes you’ll face in the future.
When trying to decide which is right for you, consider your needs. Are you a W2’d employee with one job and one form? Are you a freelancer with multiple subcontractors working for you?
Talk to us today to determine which Tax Professional you need!