Finding a good tax consultant can be more of a challenge than was previously believed. First of all, I graduated with a Masters Degree in Accounting, and I know very little about tax. There is a very common misconception out there that all accountants are tax experts; this is simply not true.
A lot of accountants focus on auditing or on managerial accounting. Maybe back in the day when everyone was not so specialized, all accountants did understand taxes to some degree. However, now with the focus on specialization, accountants can make it through a top accounting school without ever having filed their own taxes (I’m living proof). So lesson number one in finding a tax consultant is to realize that not all accountants are tax accountants. Make sure to ask your accounting buddy what he does before having him give you or your business some “sound” tax advice.
Obviously the more experience a consultant has the better. That being said, the experienced tax consultants are going to charge much more. Some of the rates out there are almost absurd. If you just need help with your basic taxes, then why not find a friend that can help for free. Or if you’re really worried about this year’s tax return you can always go into one of the popular tax shops out there like H&R Block. The truth is that a lot of the tax software out there nowadays is pretty self-explanatory. You just enter the information it asks for and it calculates your taxes for you.
If you are a small business owner, you may need some help with your taxes. Here we would recommend finding a tax consultant who works for a local company, preferably a small one. You want to match the size of the consulting firm to the size of your firm. If you’re a small firm and you hire out one of the Big 4 to do your taxes, you are likely overpaying. If you’re a huge firm and you hire out some small local firm to do your taxes, you’re probably not getting the expertise you need.
To perform tax consulting, an accountant doesn’t necessarily need to be a Certified Public Accountant (CPA). However, if you’re running a business we would highly recommend finding a CPA. Every once in a while you’ll find a diamond in the rough who understands taxes really well but just never found the time to take the exam. But more often than not, accountants who haven’t taken the CPA exam aren’t taking their profession seriously. It is representative of their character, and you probably don’t want someone like performing your company’s tax consultancy.
Price of Tax Consultant
Depending on experience, education, certifications, etc. tax consultants will charge varying amounts. Usually they charge an hourly fee. A lot of the better tax consultants out there will charge $100 – $200 an hour. This may seem like a lot, but depending on your situation you may only need to meet with them for a couple of hours. It’s either this or paying lawyers to defend you against the IRS.
In summary, not all accountants are tax people, try to find a CPA when looking for a tax consultant, and be willing to shell out some money if you actually need to meet one.
