Which Do You Need? A Tax Preparer or an Accountant?
During the months leading up to April, we must all make decisions about how we’re going to prepare and file our business taxes. If you file them yourself or have been using the same person or firm for several years to do so for you, this might be a relatively easy decision to make. However, if you haven’t yet found someone you trust to help you in this area, you might have questions about who you should pick and why.
And what if you’re in need of someone who will assist you throughout the entire year and not just at tax time? You know, someone who will analyze your business finances, run reports, and help you make financial decisions. If this is the case, you’re likely going to need to find a reputable accountant instead of a tax preparer. There are differences between the two. Let’s discuss!
Tax Preparers vs. Accountants: What’s the Difference? Here’s a very plausible scenario: You recently started your own hair salon, and business is going great. You decide that you’re going to apply for a loan to purchase equipment and hire more stylists. But when you contact your tax preparer to ask for the financial statements that you need to apply for the loan, they don’t get back to you. Time to feel frustrated, right? But it turns out that your tax preparer isn’t an accountant and so this kind of request isn’t part of his or her wheelhouse. In fact, you’ve asked the wrong person to supply you with this kind of information!
The reality is that not all tax preparers are accountants, and not all accountants are tax preparers. An accountant generally makes themselves available to their clients throughout the entire year. It’s expected that they will have an ongoing relationship with you and will be open to helping you with a variety of financial needs, whether it be assessing the health of your business, applying for a small business loan (which means that you’ll need timely and correct financial statements), or even supplying key business metrics (like debt-to-equity ratios or cost of sales) to an interested investor.
A tax preparer, on the other hand, will probably play a larger role in your life as it gets closer to tax season because preparing and filing tax returns is their specialty - not providing long-term, year-round financial support for your business like an accountant. Having said that, however, it is ideal to work with a tax preparer who is available anytime you receive a notice from a tax agency.
If you’re looking for a tax accountant (again, someone who will assist you with both your taxes and other financial tasks throughout the year), check out the National Society of Accountants (NSA) and/or the National Association of Tax Professionals (NATP). Both organizations are reputable and valuable resources.
A Final Word From Tuesday P Brooks, Founder of AJOY Understanding exactly what type of professional (whether a tax preparer or an accountant) will serve your needs and the needs of your company is crucial. Armed with this knowledge, you’ll be able to pick the right individual to work with on your business’s taxes and other financial needs, saving you both time and your sanity. Plus, it will make it so much easier to secure the loan you need, manage any tax issues that arise, and impress any (all!) investors who come into the picture. So now that you know the difference between a tax preparer and an accountant, choose wisely and go forth to conquer and succeed! Best wishes!