Types of Tax Professionals: Which one is right for me?

Most small business owners work with some sort of tax professional, whether it’s a CPA, bookkeeper, tax advisor, or all three. But how do you know you’re working with the right one?

Here’s a quick rundown of the types of tax professionals, and how they can help you grow your small business:

CPA (Certified Public Accountant): When you ask a small business owner, “Who does your taxes?” chances are they’ll answer with, “My CPA.” A CPA is someone who has passed the CPA exam and is therefor licensed by their state’s governing board. CPA’s take courses in accounting, financial audits, taxation, business administration, and much more. Just like any other profession, there are CPA’s that specialize in certain different areas, and not all CPA’s specialize in personal or small business income taxes. Yes, in order to become a CPA you must take courses in taxation, but many choose to specialize in other areas like public audits, non-profits, business finance, etc.

Enrolled Agent (EA): An Enrolled Agent is a licensure given to tax practitioners by the Internal Revenue Service. Enrolled Agents can also represent taxpayers before the IRS and state revenue departments. Education that Enrolled Agents take focuses solely on taxation, tax preparation, and the ethics of representing taxpayers before the IRS. Many Enrolled Agents are also bookkeepers, tax preparers, and small business owners.

Tax Attorney: A tax attorney is an attorney who is licensed by their state’s bar association to represent clients in legal matters. Sometimes this involves representing clients before the US Tax Court, IRS, or state jurisdictions. Some tax attorneys are also CPA’s or tax preparers, but an attorney focuses on the legal aspects of a case, not the tax preparation and bookkeeping side.

Bookkeeper: Bookkeepers are a small business owner’s best friend because they handle the finances and keep the “books” in order. Some bookkeepers are licensed as a CPA or EA, but there are no education or state requirements or licenses required to have someone do your books. Some bookkeepers focus entirely on bookkeeping, payroll, etc. and then pass those financials along to a qualified tax preparer at the end of the year. Other bookkeepers are “in-house” and work for large companies.

Tax Preparer: A tax preparer is someone who prepared your tax returns for filing. Some tax preparers are licensed CPA’s, EA’s, or credentialed tax preparers, but each state has different requirements when it comes to licensing tax preparers. The IRS does not have any license requirements for tax preparers, so be sure to do your research when choosing someone to prepare your taxes.

Tax Advisor: Lastly, a tax advisor can be all of, or, none of any of these! A tax advisor is most commonly someone who will help you and your small business with tax planning, tax preparation, bookkeeping, etc.

When choosing the right tax professional, it’s important to keep your needs in mind. Do you need someone to help you year-round? Or maybe just during tax season? Do you plan to take your company public on the NYSE, or are you just looking for a little help doing your books?

Here at Havig Tax & Consulting, we can help you determine what kind of tax professional will be the right fit for you and your small business, based on your needs and goals for the future. Contact our office today to schedule your appointment.