When it comes to getting help with your taxes, there are a variety of options available depending on your needs and budget. A quick Google search uncovers that the two most common options are CPAs (Certified Public Accountants) and tax lawyers. But when should you consult a tax lawyer vs. CPA? Selecting the wrong tax support is one of the more costly mistakes made by small businesses. Before you decide, it helps to learn the differences between a CPA and a tax lawyer.
CPAs are professionals trained in various accounting-related areas, one of which is tax. They’re authorized to represent clients in front of the IRS. State requirements for becoming a CPA can vary but include completing 150 hours of college or graduate-level work and passing a qualifying exam. A CPA is a solid choice to help you do your taxes—and keep good records throughout the year, helping with small business tax deductions.
A tax lawyer has completed law school, passed the bar exam, and specializes in tax-related work. They can be very helpful in small business legal services.While both a CPA and tax lawyer can represent you before the IRS, this is where the big difference between a tax attorney vs. a CPA becomes clear. A tax lawyer’s training is particularly helpful if you’re facing penalties. CPAs can help in disputes as well, but they’re not as well versed in the minutia of the law, nor are they trained to make an argument the same way lawyers are. Another area that may convince you to work with a tax lawyer vs. CPA? Tax lawyers can be beneficial in tax planning, advising you on how to structure your assets in a way that minimizes your tax liability.
However, tax lawyers aren’t trained in bookkeeping or tax filings. If those offerings better suit your needs, you may be better off going with a CPA.
A CPA and tax lawyer can also differ in cost, which is an important factor to consider.Tax lawyers are almost always more expensive than CPAs, although it’s possible to find attorneys with competitive rates. If you’re on a budget and just need help doing your taxes, consider working with an Enrolled Agent, or EA. EAs have passed a three-part, comprehensive IRS exam covering individual and business returns.
They must adhere to ethical standards and complete 72 hours of continuing education courses every three years. Similar to CPAs, EAs are authorized to represent you before the IRS, but unlike CPAs, they focus specifically on tax work rather than the broader portfolio of expertise that a CPA can bring to the table.
While they’re required to register with the IRS, tax preparers are not subject to any type of credentialing in most states. The upside is that tax preparers are usually the most inexpensive category of tax professional, but the downside is that there’s a wide range of quality among tax preparers. If you hire one, be sure to do your homework first.
Regardless of whether you choose a tax attorney vs. a CPA, make sure you do your research. Before you go into a consultation, know what questions to ask a tax attorney. Look at their credentials, investigate how much experience they have, and try to get references.
Incorporation is the legal process of turning a business into a “legal person” that’s separate from you. An incorporated business can own property, pay taxes, and sign contracts under its own name.
Your registered agent is your business’s official point of contact, and you need one in every state where your company is formed or registered.
We’ll cover all the steps and even tell you about more things you’ll need to do after your LLC filing in Tennessee.
Your LLC won’t officially exist until the state accepts your Articles of Organization. You’ll need the filed document to open LLC bank accounts, apply for business licenses, and sign contracts.
While this guide gives you useful information about paying yourself from an LLC, it is recommended that you consult with a CPA or an accountant so your LLC is set up with the best tax classification to meet your needs and maintain compliance with IRS regulations.
Running a corporation, no matter how small, requires ongoing documentation. Without a comprehensive record book, it’s harder to find and follow your corporate rules and meet reporting requirements.
