Should I use an accounting firm?
The answer to question largely depends on your needs.
If you are a small business owner or entrepreneur, an accounting firm can help you focus on your core constituencies without worrying about financial minutia. Unless you have a skilled accountant on board, you will likely save time and money by working with an accounting firm instead of wading through complex financial regulations and tax codes on your own.
If you’re an individual who needs help with your taxes, you should ask your self a couple of questions to help you decide whether or not to use an accounting firm.
- Am I confident enough in my own ability to complete my return without making potentially costly errors?
- Do I have adequate knowledge about tax policy to file my tax returns on my own?
- Do I want to spend valuable time dealing with my taxes?
If you answered “no,” you may consider using a tax firm to help you complete your taxes in a stress free and timely fashion.
What is the difference between a CPA and an accountant?
All CPAs are accountants, but not all accountants are CPAs. Accountants monitor the finances of an individual or a business, issue financial statements, and keep records.
The CPA title demonstrates that the accountant in question has sufficient education and experiences and has passed their Uniform CPA Exam. CPAs are also regulated by the state and have to complete continuing education to keep up with changing accounting trends and developments.
I made a mistake on my tax return. What should I do?
First, don’t panic! Your required action will depend on the type of mistake you made.
- If you forgot to include a certain piece of information, it’s likely that the IRS will contact you to request the specific piece of information.
- If you made a mistake in your calculations, many small mathematical errors will be discovered as the IRS processes the return. It’s unlikely that you will have to correct errors of a small caliber.
- If you forgot to report some of your income or if you forgot to claim a credit or deduction, you will need to file an amended tax return using a 1040X Form. These forms can be found on the IRS website.
If you have further questions or concerns about an error on your tax return, or if you need help filing an amended tax return, feel free to contact us.
How long should I keep my financial records?
The IRS gives a number of different guidelines for keeping financial information, and this information varies depending on whether you are an individual or a businesses
General rules for individuals
- Keep bank statements for 1 year
- Keep loan documents, credit card statements, and other contacts until fulfilled
- Keep annual investment statements until sold
- Keep tax records for 7 years from filing date
- Keep receipts for large purchases, real estate deeds, vehicle titles for as long as you own the property
- You can general discard expired warranties, pay stubs, and cancelled checks
General rules for small businesses and entrepreneurs
- The rule of thumb is to keep all items for at least 3 years
- If you have not yet paid taxes on income that you should report, keep documents for 6 years
- If you claim a credit or refund after you file a return, keep records for 3 years from the date you filed the return
- If you file a claim for securities or bad debt deduction, keep records for 7 years
- Keep all employment records for 4 years from the date that the tax is paid
What do I do if I can’t pay the taxes that I owe?
First of all, stay calm. If you can’t pay the full amount due, you should still file your return and pay what you can by your deadline to avoid interest and penalties. Then you should contact the IRS to discuss payment options. In some cases, the IRS can offer a short-term extension to pay, an payment installation agreement, or waive your penalties.