The Pros and Cons of Hiring a Tax Professional

Key takeaways

• A tax professional is someone who helps you with taxes and related services. They can include certified public accountants (CPAs), tax attorneys, enrolled agents, and more.
• Tax professionals provide significant benefits, such as additional expertise, time-saving opportunities, and the ability to represent you before the IRS. They also will often find ways to lower your tax bill.
• However, tax professionals typically cost more than filing on your own and may not always be available if they’re working with several clients at once.

Hiring a tax professional: Key considerations

A tax professional is someone who helps you with taxes and related services. A certified public accountant (CPA) is licensed by the American Institution of Certified Public Accountants and has passed a four-part Uniform CPA exam. Licensed CPAs can represent clients before the IRS should the need arise. 

Other tax preparers include tax attorneys and enrolled agents. Preparer tax identification number (PTIN) holders and Annual Filing Season Program participants are also tax advisors, though they don’t require a bachelor’s degree and can’t represent clients before the IRS.

Here’s when you might consider hiring a tax preparer:

• You want peace of mind: Working with a qualified professional gives you peace of mind that you’ve paid the correct amount (or received the proper refund) from the IRS.
• You want to save time: Filing taxes can be very time-consuming, even when using tax filing software. This scenario is especially true if you earn income from multiple sources or manage a small business with several employees.
• You’re in a new tax situation: Did you earn self-employment income this year? Do your employees have Additional Medicare Tax considerations? New tax situations can be a roadblock to filing with confidence. A tax professional can help alleviate those concerns.
• You want to maximize your savings: Taking the standard deduction is the easiest option. However, if you do that, you could miss out on all the deductions you may be eligible for. Professional tax preparers can catch all those minute details, helping you save money on your tax payments. 
• You need to speak with the IRS: Should the IRS take issue with your tax return, a tax professional can represent you on your behalf.
• Tax laws and regulations overwhelm you: You may have different or changing tax laws or regulations depending on where you do business and your company’s legal structure. A tax professional will keep you and your business compliant.

Pros and cons of hiring a tax professional

Pros of hiring a tax professional

There are many benefits to working with a tax professional. Here are the most common ones.

• You’ll spend less time and energy on your taxes: Even filling out the most basic tax forms can be arduous. More complicated situations can take hours upon hours to go through everything. A professional will handle all that so you can focus your energy on your business.
• They may save you money: Hiring a tax professional, especially a CPA, may cost a few hundred dollars, but it could save you even more in the long run. A tax professional will likely find deductions and other tax breaks you’d otherwise miss, which could end up paying for their services and then some.  
• You’ll file more accurate returns: If your hands are shaking by the time you finally submit your return, you’ll have more peace of mind with professional tax preparers. They also stay up to speed on the latest rules and regulations, so you’ll always be compliant.
• They can speak to the IRS on your behalf: Should you be audited thanks to a previous tax return or not reporting all of your earnings, a CPA, enrolled agent, or tax attorney can represent you in front of the IRS. They may be able to reduce or eliminate any penalties from back taxes.
• They can review previous returns: Did you self-file last year but weren’t sure if you missed out on something? A professional tax preparer can review your prior returns and, in some cases, get you additional money back.
• They can help you throughout the year: Though tax season is their busiest time, tax professionals can provide regular services throughout the calendar year. They can assist with strategic planning, offer financial analysis, or help get your books in order.

Cons of hiring a tax professional

While the pros of hiring a tax professional are plentiful, there are a few things to consider before you jump in. Here are some cons of hiring a tax professional:

• They can be more expensive: The average fees of a CPA vary based on the type of work. A survey from The National Association of Tax Professionals found hourly rates of about $150 (for Schedule C filing) to north of $900 (for Form 1120 for corporations). Their work is good, but if you’re on a strict budget, it could prove too costly to bear. 
• They aren’t available 24/7: Chances are a tax professional is working with several clients at once. They won’t be available at the drop of a hat. However, they should be communicative and let you know if you need to expect delays or provide estimates on when they can have updates.
• They may not have specific expertise: If you work in an incredibly niche industry, a tax professional may not completely understand the ins and outs of your business. This shouldn’t be an issue for the most part since consistent tax regulations generally apply across the board, though it’s worth asking if they have experience in a related area.

They don’t always handle bookkeeping: Some CPAs or other tax professionals only do tax filing and leave you alone for the rest of the year. You may end up having to hire a separate bookkeeper.

Pros and cons of hiring a tax professional to file your taxes 

You’ve seen professional tax preparers pros and cons, but what about hiring a tax pro vs using tax software to file your taxes?

Pros and cons of hiring a tax preparer to file your taxes

Pros

• They’ll likely help you lower your tax bill: You might be filing your taxes on your own without realizing you could be saving money. Small business owners can take advantage of several tax deductions, and a tax professional will make sure you’re getting the most value from your return.
• They’re more accurate: CPAs, enrolled agents, and tax attorneys know the ins and outs of tax laws and regulations and are required by law to practice continuing education. Their extensive knowledge improves the accuracy of the returns they file.
• They’ll save you time: Unless you’re Homer Simpson and randomly fill out numbers because you waited five minutes before the tax deadline, filing taxes is a time-consuming task. A tax professional handles all of that for you.
• They can utilize better technology: Because CPAs and other tax professionals are helping so many people with their taxes, they have access to the top accounting technology. Their software is more robust than the tax filing programs online, and it helps them ensure accurate returns.

Cons

• They’re typically more expensive: The average cost of filing tax forms is several hundred dollars. There could be even more costs along the way; for example, tax advisors will often charge more for filing with itemized deductions compared to the standard deduction. 
• You have less insight into your returns: Your professional will handle the tax filing process by completing any tax forms for you, and many will let you take a final look before the final submission to the IRS. But you may not know why a tax preparer did something on your return, and it could be challenging to find out why.

Pros and cons of using tax preparation websites and tax software

Pros

• It’s typically cheaper (and free for certain income levels): Using tax preparation software to file your taxes will usually cost you less than hiring a professional. In fact, if your adjusted gross income is $79,000 or less, you qualify to file for free.
• It gives you more control: You’re in the driver’s seat using tax preparation software. For some folks, that might make you want to pull over and get off the road. Others prefer being behind the wheel and knowing what they’re entering for every section, choosing deductions and expenses to include.
• It might be simpler: If your tax return is fairly straightforward, it could be a simple enough tax filing process. It might still take a while, but there won’t be as many curveballs as more complex tax situations would throw at you. 

Cons

• You may miss deductions: Some software can indicate when to look for a particular deduction; others may just ask if you have anything you want to add. If you don’t know the ins and outs of business deductions, you may end up with a higher tax bill. 
• There could be hidden costs: Most tax software’s advertised prices are for the basic filings. If you pay yourself through your company and earn self-employment income elsewhere, for instance, you may come to a point where you’re charged more to be able to continue to file your tax return. By then, you’ve already poured hours into the work, forcing you to pay more than you initially planned.
• You might deal with AI: Tax software programs use AI support. This could look like a chatbot or an automated review of certain portions of your return. The automation can sometimes spot errors, though it might overlook something a human would catch. If you want additional human eyes on your work, a tax software program won’t provide it—and if they do, it’ll be an extra cost.
• It may take longer: Tax software programs claim to be fast and simple, but again, they’re generally looking at the most basic returns. While your employees may only need to file one form, you likely have more on your plate. Navigating through that in tax software can be more cumbersome than advertised. 

If the DIY route makes you uneasy and hiring a tax professional seems too expensive, or there aren’t available CPAs in your area, you’re not out of luck. You can always work with a third-party tax service like Bench to file your business taxes—and do much more. 

How Bench can help with filing your business taxes

Bench offers tax filing and bookkeeping services to self-employed and small business owners. We’ll handle the stressful parts so you can spend more time doing what you love with your business.

We’re here for you beyond tax season, too. We provide year-round tax consultations and advisory services to help you navigate your tax situation and find ways to lower your tax bill or increase your tax refund. It’s an all-in-one solution to the often complicated tax world.

Ready to see how easy it is? Get in touch and start having peace of mind with your tax returns. 

How to choose a tax professional

Before deciding on a tax preparer or a third-party service like Bench, here are a few tips for choosing the best option for you:

• Consider your business needs: Knowing what you’re looking for can save you from headaches later on. Some tax preparers have certain specialties or only work with small business owners. Some may include bookkeeping, while others may prefer only filing more simple returns. When you know what you’ll need help with, you can share it with prospective tax professionals and see if they’re a good fit.
• Look for referrals: Ask fellow small business owners or self-employed individuals what they use for tax preparation and filing. They may have a referral for you. Your local Chamber of Commerce, bank, and realtor could also have good suggestions.
• Check out reviews and qualifications: Many accountants have reviews online, so you can look for those in your area. Review their qualifications, too. A good accountant will have a PTIN number and may be a member of organizations like the National Association of Tax Professionals or the American Academy of Attorney CPAs. You can search within the IRS directory for additional information.
• Reach out to talk: You don’t have to hire anyone sight unseen. A good professional will be willing to meet with you and answer your questions. Prepare a list of topics to cover, such as their rates, experience, qualifications, the software they use, if they outsource any work, and their communication policies. Don’t hesitate to reach out to set up a meeting. 

Taxes can feel daunting for any small business owner. With the right partner, you can take back control of the situation.