Hiring the Right Tax Advisor for Your Small Business

Finding the right tax advisor for your business can make all the difference. The wrong tax advisor is a guarantee for an endless litany of problems and hassles, and may even result in more work than if you had done your taxes yourself. But the right tax advisor can save you time, and more importantly — money.

The process of locating a good tax advisor will require a little effort on your part. Here are some things you will need to consider before you decide whether a tax advisor is the right one for your business:

Qualifications
The first question you need to ask is whether or not the tax advisor is qualified to handle your tax reporting needs. The person you hire to handle your personal income taxes may or may not be qualified to handle the tax reporting needs of your business.

Most businesses turn to certified public accountants (CPAs) for tax advice. CPAs have been trained in business accounting procedures. They have also passed rigid national and state exams in order to receive the CPA designation, ensuring that the advice you get meets federal and state standards.

Referrals
When selecting a tax advisor, it's advisable to get referrals from other business owners you know and trust. Don't just get a name, but ask questions that will help you make an informed decision.

If possible, look for referrals from businesses that are similar to your own since each industry has specific tax reporting needs. Ideally, you are looking for a tax advisor that understands your industry and can not only help you with tax reporting, but also with tax planning.

Availability
Something else to consider is how much time the tax advisor will be able to devote to your business. You may have the best tax guy in the world, but if you can never reach him, he's worthless to your company. In the worst case scenario, an overbooked tax advisor can cost you money in filing penalties and interest charges.

Cost
Cost is another factor in finding the right tax advisor. As with anything else, the cheapest option may not always be the best option. Quality counts, even though it may cost a little bit more.

Locate and interview at least two potential tax advisors to determine which one will be able to meet your needs for the least cost. When discussing cost, get a breakdown of what you are purchasing. In some cases, you may be able to save money by doing part of the job in-house.

Long-term Potential
The best tax advisor is usually one that is familiar with your business. Obviously, it will take some time for a new tax advisor to become familiar with your business. However, you should hire a tax advisor with whom you can potentially build a long-term relationship. If the tax advisor is six months away from retirement — keep looking!