Bobby Brannock | Sound Accounting & Music Services
There is only one way to prepare a tax return correctly. You may think you can get a better outcome by shopping around for tax preparers or preparing your return yourself. Either way, there is still only one correct way to prepare a tax return. That said, not every tax preparer is equally as thorough, honest, and competent to prepare a tax return.
So, buyer beware. You should always carefully consider hiring people to prepare your tax returns. Ask for references or consider using a local preparer. Not every large tax preparation chain puts the care and thought into each return that a local firm might.
If you have your own small business, there are more complexities to consider when filing your return, and if you have any doubt at all as to how to file, you should seek out the advice of a professional tax preparer.
As a preparer myself, one of the most common answers to the first question I ask of a business client is an example of some of the confusion that can arise, to wit: me: “What form is your business taking about filing taxes?” client’s almost always (incorrect) answer: “an LLC” — The issue with this is that “LLC” is not enough of a description to file a tax return. An LLC is a state designation, and an LLC can file a federal income tax return as a sole proprietorship, an S-Corp, a C-Corp, a non-profit organization, or a partnership. These are the most common types of business LLC filings. If you own and operate your own small business and do not know which type of filing will best fit your company, you should seek the advice of a tax professional.
If you do not own a small business,, you may or may not need to seek a professional tax preparer. Many individual taxpayers and families can file for free online through Free File due to the IRS agreement with some software providers. The IRS webpage www.irs.gov has the criteria and information for that. Suppose you have a relatively simple income situation, such as only receiving W-2s for income. In that case, it is highly recommended that you either use Free File or purchase a base level of a software product that can e-file for you for a relatively small cost. If your situation is more complicated, such as if you have investment income or income from a small side business or rental activities or other types of income, you may want to seek the help of a professional.
It is beginning to look a lot like tax season, and even though the deadline for filing most returns is not until April 15, certain business returns are due on March 15. If you wait too late, you may have to file an extension, which comes with other pitfalls, such as the fact that an extension will give you more time to file but not more time to pay.
Therefore, even though you may not know how much you owe on April 15 because you are filing an extension, the IRS still requires you to pay an estimate of that unknown amount on April 15 along with your extension. The IRS will always lean towards having their cake and eating it, too, so be aware of all of these things because there is still only one correct way to prepare your return, no matter the who, how, and when.