Choosing a Tax Advisor
You're starting a new business. Like many people, you may find that, with all your new responsibilities,
you may need assistance with your taxes, and you may decide to hire a professional tax preparer - someone
with experience preparing tax returns for businesses like yours.
There are many types of tax preparers who may be qualified to help you. Enrolled agents, tax attorneys, and certified public accountants are all professionals with expertise in federal taxes.
Before selecting a person or firm to handle your business, ask a few questions to see if they offer what you are looking for.
Experience: Has that person worked with businesses similar to yours in size and type? Is he or she familiar with your particular line of business?
Services: Does the tax professional offer electronic filing - the safest and most efficient way to file your return?
Price: What does that person offer for the fee he or she is quoting? If the IRS examines your return, what is that person's policy on assisting you?
References: Ask for a list of clients that you can contact.
Calendar Year vs. Fiscal Year
A year is a year, right? Yes and no. Different types of businesses may use different types of "tax
years" when it comes to figuring taxable income. A tax year is an annual accounting period for keeping
records and reporting income and expenses.
A calendar year runs from January 1 through December 31. Generally, anyone can adopt a calendar year for his or her tax returns. In some cases, you may be required to adopt a calendar year.
Some businesses have "seasons" that don't follow the traditional calendar. If your business will have such seasons, you may be eligible to use a fiscal year that ends on the last day of a month other than December.
Generally, whether you choose a calendar year or a fiscal year, you must use it on your first tax return, and for all subsequent tax returns unless you get IRS approval to change your tax year. You can request a change in your tax year by filing Form 1128, "Application to Adopt, Change, or Retain a Tax Year."
See IRS Publication 538, "Accounting Periods and Methods."
Information courtesy of the Internal Revenue Service.
