A tax preparer should have a few key qualities, whether they practice in Wilmington NC or not.
Tax preparers need to have a genuine interest in their client that transcends mere taxation. Often CPAs are the only folks trained in business and finance associated with the company. It is our duty to look for areas the company can improve in. Personally, I look for ways the company the can bring in more revenue and then keep more of what they earn. A good tax preparer knows that tax expense is only one of many important accounting parameters.
A CPA tax preparer needs to do proactive tax positioning. Tax planning often just means arranging your business affairs such that the least tax is incurred. Retroactive tax re-structuring is illegal. But sometimes I find enough tax savings in prior years, with a new client, to prepare amended tax returns for those years.
For example, when I took over the accounting and tax preparation for a Tennessee Chiropractor, I found no Goodwill expense listed on the prior 1120S tax returns. While accounting doesn’t allow Amortization of Goodwill, the IRS does. I found $225,000 of un-claimed and un-deducted Goodwill from the original purchase of the practice. While I didn’t prepare amended tax returns, we are able to deduct $15,000 per year for the next 15 years. This is an example of a CPA tax preparer only doing due diligence for a new client. Cost to me: an hour. Eventual aggregate tax savings to the Chiropractor: $65,000 plus.
I think a tax preparer needs to look at what’s there and shouldn’t be. Most CPAs and Enrolled Agents do this automatically. No, you can’t deduct your dog’s veterinary expenses, unless you make him a company mascot. It just raises red flags. But a tax preparer also needs to look for what is not there, but should be. If I were choosing business tax returns to audit, I would be interested in, for example, companies showing no auto or truck expenses. Why? Because all companies have auto expense and a tax preparer who doesn’t list any may have made errors in other parts of the return.
Finally, there is credentialing. There is a new level of income tax preparer for 2011, or more accurately, a re-classification of an existing type of tax preparer. I’m not sure what the exact name is, but these are the tax preparers who work at the chains like Liberty, H&R Block and Jackson-Hewitt. Up to now, these tax preparers only had to pass internal training, but meet no IRS qualifications. Now they have to pass a test which only concentrates on personal taxation, and only limited portions of that.
If you need a free initial consult form a CPA tax preparer, please call us at (910) 399-2705