Small businesses are not spared from their tax obligations. Like their larger peers, they are required to file their tax returns in time. Often, small business owners who have little to no knowledge of taxation rely on tax professionals to prepare their filings.

Tax preparers 101

Think of the “tax preparer” tag as a general term. A tax preparer can be a CPA or someone who’s only doing filings part time, such as those working in those tax preparation pop-ups commonly see in malls. The one quality, however, that all tax professionals have in common is that they are trained to calculate and file tax income returns.

Can a tax preparer advise you in taxation matters? It depends on their titles and qualifications. A CPA may sound like a better choice over the IRS’s enrolled agents, but keep in mind that not all CPAs specialize in taxes, whereas enrolled agents are solely focused on them. Enrolled agents, on the other hand, are not the ideal choice when you need legal assistance; that’s the job of tax attorneys. In sum, the professional that you need will depend on your tax situation.

Quick breakdown of tax pros

Here, we list of each type of tax professional and what they specialize on.

Enrolled agents

An IRS enrolled agent is trained and federally authorized to represent their clients before the IRS in matters pertaining to collections, audits, and appeals. The title is recognized in every state.

Accountant

An accountant is someone who knows how to record and report financial transactions. Even without a degree, accountants can hold positions in the finance departments of both public and private institutions. The level of their tax knowledge, however, depends on the level of familiarity of the individual.

CPAs

A CPA is an accountant who has passed the licensing requirement of the state where he or she is applying the license for. Unlike regular accountants, CPAs have stricter requirements when it comes to acquiring a license, such as a minimum number of college units and passing the Uniform CPA Examination.

Tax attorneys

You may not need this professional unless, of course, you’re in trouble. While CPAs can help you with auditing, accounting, and tax preparation matters, a lawyer is a better choice if you need legal advice or if your already facing liens and levies.

Tips for hiring a tax pro

You need to do your due diligence when hiring a tax pro, because no matter who prepares your filings, you will be held responsible for their accuracy, according to the IRS. Unscrupulous characters in the industry abound, and even the IRS itself advises taxpayers to choose their tax preparer carefully.

According to the IRS, it is a good idea to check the preparer’s qualifications and history, avoid preparers who bigger refunds than their competition and fly-by-night preparers, and ensure the preparer signs and include their Preparer Tax Identification Number. If you feel your tax preparer is being dishonest with you, you can always file a complaint with the IRS.