I’ve been a tax professional for over 10 years and I have stories for days about the ugly truth when it comes to DIY tax prep. On the other hand, there are a handful of individuals who have very simple tax situations and can therefore go the DIY route. As tax season is upon us and the commercials and advertising begins, you’re probably thinking about the best solution for you and your business. I would consider owning a business a triggering event that signals that it’s time to seek professional help but to remove my personal bias here are the pros and cons of DIY tax prep.
I’ll be honest, as a tax professional I don’t believe that there are many pros to preparing your taxes yourself. Below are the two main benefits:
Save money: Choosing to DIY your taxes, you save money because you aren’t paying someone to do it for you. Usually when going the DIY route you only pay for the software that you use to file (ex: Turbo Tax)
Learn as you go: Tax can be a complicated subject and as a result you will learn a lot as you walk through the different schedules, deductions, credits, etc. You’ll do a lot of Googling and asking questions which will expand what you know about the subject. Whether you work with a tax professional or not its important to be educated on the tax preparation process and how your personal and business lives relate to taxes.
I can go on and on about the many reasons you should use a tax professional but these are the top reasons for not doing your own taxes:
Greater risk of error: The tax code can be complicated and not to mention there are lots of schedules and forms. There’s greater risk of error as you navigate tax software and try to figure out what’s applicable to you.
Takes a significant amount of time: Along with the reason above, tax preparation requires research. When you don’t know what you’re looking for or if what you’ve found is correct, you can spend a lot of time combing through information. You’ll find yourself trying to connect the dots and figure out how the information you’ve found applies to you.
Missed deductions: Understanding what tax deductions you are eligible for is a process in itself but can reduce the amount owed or get you a larger refund. A simple Google search will list common deductions but then you’ll have the not so common ones that can easily be missed. No two situations are the same and you can miss deductions when you don’t know which ones will help you maximize your specific tax situation.
Lack of one on one advice: This is the biggest con to DIYing your taxes. Having access to expert advice can mean the difference between owing hundreds or thousands of dollars or walking away with a refund. Most times, you need to talk through the choices you’re making to not only make sure they’re appropriate for your situation but also correct and legal.
Working with a tax professional gives you peace of mind and access to that one-on-one advice. Depending on the professional, many also offer tax planning that’ll help you with making decisions during the year. Taxpayers make the mistake of thinking that January through April is the only time taxes should be managed or thought about. That couldn’t be further from the truth. The best course of action is to have a tax plan for the year that you execute on so that there are no surprises when it’s time to file.
Small business owners can benefit from working with a tax professional that knows how to navigate the tax code. Free up the time you would spend trying to file your taxes on your own and work with a professional. Schedule a free consult to find out if we’re right for you!