There are many stressful aspects of running a business, and doing your taxes counts as one of them. Most people, save for tax preparers and accountants, actually enjoy preparing taxes. Luckily, the ever-improving suite of tax software makes it easier to do your own taxes.
Despite the convenience and ease of use of this software, it’s hardly put tax preparers out of business. This begs the question of whether you’d be better off working with a tax preparer or would you do just as well by using tax preparation software?
Price – Using tax preparation software will always cost significantly less than hiring a CPA or other qualified tax professional. The upfront savings gained from the use of tax preparation software is one of its strongest benefits that appeals greatly to those who wish to prepare their own taxes.
Ease of Use – Tax preparation software are often easy to use and they come with a walkthrough that guides users through the process quickly. This is ideal for users who have few sources of income, few deductions, and few investments because there isn’t a need to sort it all out.
Speed – Using tax preparation software often takes less than an hour as long as you have all the necessary documents in front of you.
Access to Better Software – The software that accountants use is far more sophisticated than any consumer-grade tax preparation software. These programs can scan information from documents and organize them into lines and forms correctly. This allows accountants and tax preparers to operate with a much smaller margin of error. Accountants spend about $1,000 to $6,000 on tax and accounting software.
Personalized Service – Much like working with a corporate lawyer who knows your business well, working with a tax preparer allows you to form a relationship to an extent that they completely understand your financial situation. Unlike tax software, tax preparers can make valuable tax savings suggestions, such as filing your taxes early, that could drastically improve your financial health.
Technical Expertise – Many business owners have a respectable knowledge on how to sort through their taxes. The more important matter to determine is whether or not it’s worth their time. Hiring a tax preparer not only expedites a process that would normally take even the most skilled taxpayers hours to accomplish. This is especially valuable if you find yourself at the center of a complex business and investment matter.
While there isn’t a one size fits all answer to which of these options is better, the complexity of your finances will be the primary determinant. Business owners stand to benefit the most from hiring a tax preparer, especially when a simple “tax preparer near me” Google search will yield many candidates to choose from. On the other hand, those with one or a few sources of income will save hundreds of dollars by using tax preparation software.
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