There are five key questions to ask before deciding on a small-business tax advisor.
Questions to consider
These questions can not only help you assesses your business tax needs, but also the business tax advisor themselves to determine if they’re a good fit for your business:
1. What role will the tax advisor play on my financial team?
Will your advisor interact with the other members of your team (attorney, financial planner etc.) to make sure everything in your financial plan is working smoothly? Will they have access to all of your business finance tools like your accounting or bookkeeping software?
2. How much experience does the tax advisor have delivering the kind of results I’m looking for?
Ask the tax advisor to share some success stories from other clients they have worked with. Most tax advisors will be able to share stories, testimonials or even references with you. Make sure you check them out.
Don’t be afraid to ask about specific strategies the advisor has used. You want the advisor to respond with answers like “we educated the client on which costs were deductible” or “we restructured this client’s business to take advantage of lower tax rates,” etc.
What you don’t want to hear is evidence that the advisor has used aggressive strategies that would cause red flags with the IRS or Canada Revenue, or strategies that are just plain illegal. Listen for words like planned, restructured, educated and documented in the advisor’s answers — these are legitimate.
3. What experience does the tax advisor have with my issues?
Does the advisor have knowledge about your industry? Do they work with anyone inside your industry right now? Do they know about any trends or news that relates to your business? What can be done to either profit from or protect you against those trends?
You want to be working with an advisor who understands your business and specific issues concerning business taxes, like the small-business tax rate. If you have to educate your tax professional about how your business routinely operates, they probably aren’t the right person for you. A tax professional should refer you to someone else if your business is not their specialty.
4. What does the advisor do for their clients year-round?
Business (and life) happens year-round, not just at tax time. You need to be able to have access to your tax advisor all year long so if a situation comes up and you need guidance, you can get advice before the transaction or event happens.
If your tax consultant only does taxes between January and April and takes the rest of the year off, that should be a red flag to you. You want somebody who lives and breathes the tax code and can apply it to your situation. You also want an advisor that will stay in contact with you during the year and alert you to any tax saving opportunities that may arise.
5. What level of responsibility will they take for my tax return?
Finally, you want an advisor that will stand behind their work. If problems come up with your tax return, your advisor should be able to address them. If you face an audit, your advisor should be able to help you through the audit process.
Asking questions like these will give you, as the business owner, the opportunity to assess your tax advisor needs, as well as the individual tax advisor themselves. Don’t be afraid to meet with multiple tax professionals to weigh their skills, experience and even personality — at the end of the day, it’s of the utmost importance that this person is right for your business and that you feel comfortable reaching out to them for help.
A version of this article was first published on Fundera, a subsidiary of NerdWallet
Article by Eric Levenhagen