There are a lot of times when a mom working from home could really use some small business tax help from a CPA, preparer or other professional. There is a reason that so many large and small businesses hire these individuals to prepare their tax filings for them. It takes years of study to become an expert on U.S. state and federal tax codes, and most business owners just don't have the time, the inclination or the resources to do more than educate themselves reasonably about what they may owe.
Here are some situations where the advice of a tax preparer or tax professional can help a small business avoid some pretty serious potential problems.
1. Business Transitions
When a business changes from one form to another, its tax burdens
change as well. A beginning work at home mom or other freelancer
generally files as a sole proprietor or independent contractor if she
has no employees. If the individual choose to become an LLC for
liability purposes, they may suddenly realize they need help to
decipher their new tax rules.
2. Adding the First Employees
There are some major tax rules that only take place in businesses
where the sole proprietor starts to employ others. This is a flash
point where many work at home businesses reach out to a dedicated tax
preparation office for help.
3. Changes in Business Assets
When a business spends a lot of money on startup costs, its
leadership may need help to hedge that cost with tax deductions. Tax
professionals can help business leaders to figure out how to depreciate
machines or big pieces of equipment in order to get some tax savings.
4. Back Taxes
If the IRS audits a business and claims back taxes based on
different interpretations of past filings, that can mean big trouble
for the owner of the business. Tax preparers routinely come in to
assess the situation and represent a small business owner when the IRS
or state department has put liens on assets or bank accounts.
5. Other Trouble Situations
Aside from the above, there are a lot more situations where someone who is guiding their own small business can benefit from taking the extra step to contact a tax preparer or CPA. One of these is when there are unanswered questions about withholding for employees. Another situation that calls for tax assistance is when the business owner has filed for extensions in order to figure out the details of their business filing. One more popular scenario includes confusion about what the business will owe at the end of each year. Having the annual tax bill be a big unpleasant surprise every April is not a good idea. It's better to take steps up front to hire those who will help plan for estimated quarterly filings and keep tax bills in the background, rather than a consistent challenge to profits.
For a work at home mom or other small business individual, it's a good idea to look at the above situations and see if any of them may apply to an existing business setup, where a tax professional can help save a client time and money.