Desirable qualities in a CPA tax preparer transcend just accuracy with the current return. Tax preparation isn’t just about getting this year’s return correct. I think tax positioning and proactive tax planning are the keys to legitimately obtaining the lowest amount of taxes due for a client. Often you can’t legally restructure prior years, but a good CPA sure looks at next year carefully. We also compare your returns from prior years to find inconsitencies which might raise red flags with the IRS.
“Being proactive with your company’s tax positioning is a vital quality in a CPA tax preparer. Just accuracy with the current return isn’t enough.”
Gary Bode, CPA | Wilmington NC Accountant and Tax Preparer
Ongoing Tax Preparation Training
CPA accountants take 40 hours of Continuing Professional Education a year to remain licensed. The AICPA does a great job of providing timely education on the latest tax changes. Everything a tax preparer needs, from new payroll initiatives to IRS bulletins. Plus refresher courses in specific areas of tax preparation. Last year I racked up 48 hours of CPA CPE.
So, ongoing training for CPA tax preparers is much more extensive than at the chains like Liberty, H&R Block, Zip-Zap, Jackson-Hewitt etc. Often, these national chains have no accountant on site. Non-CPA tax preparation or accounting firms don’t have our mandated 40 hours per year of continuing education, so I doubt some of them put that amount of time and money into it.
Accreditation
The better a CPA understands your business, all other things being equal, the better your chances are of lower taxes. Most states now require a Master’s degree in accountancy to become a CPA. NC has required this advanced degree for over 15 years. But there are still CPAs who don’t hold a MSA. Not that practical experience can’t compensate for education. Does my Master’s degree help clients? Absolutely. Not so much maybe in actual tax preparation, but certainly in ascertaining how your LLC, S-Corporation or Partnership functions financially.
If you need a free consult on your company’s tax preparation, or any accounting issue, please call us at (910) 399-2705.
Being Proactive
I keep a list of client issues. Even within specific types of returns, say partnership for, example, there are specific issues to watch for if you’re the type of person who wants to be proactive in the services one offers. Some areas in tax preparation change faster than others. Generally if a CPA prepares a company tax return, we do at least one of the owner’s individual tax preparation too. So there are a wide variety of taxation issues I try to keep up with throughout the year.
Sometimes being a proactive tax preparer is just reviewing the prior tax returns and accounting for a new client. The largest thing I’ve ever found as an accountant, CPA or tax preparer? $225,000 of prior unclaimed, undeducted Goodwill. An accountant can’t amortize Goodwill in the Financial Statements. But the IRS allows a company to deduct it over 15 years. Would other accountants have caught this? I’m sure most CPAs could and would. But sometimes the rush of the tax preparation season prevents us from being as thorough in getting to know a client. So anyway, this client, a Chiropractor, had bought her practice 7-8 years before becoming my client. I picked up that she hadn’t opened cold and noted no Goodwill deduction was present. There is no expiration on Goodwill for deducting it in tax preparation for the IRS, so there was 15 years of $15,000 tax deductions available. So a good accountant, CPA or tax preparer looks for things on the tax return that shouldn’t be, and, things that should be and aren’t. My guess is the IRS flags returns for the same reasons. If an accountant misses an obvious and expected deduction when preparing the tax return, what else is incorrect?
Attitude
You know, the CPA tax preparation business just wouldn’t be worth it if I didn’t take pleasure in helping companies prosper. Especially in a recession, your company’s success is my success. And Wilmington NC is a pretty small town after all.
Types of Business Returns
- Schedule C on IRS Form 1040 with NC D400.
- IRS Form 1065 with NC Form D403 (Partnerships and LLCs).
- IRS Form 1120 with NC Form CD401 (C Corporations and LLCs).
- IRS Form 1120S with NC Form CD401S (S Corporations and LLCs).