There are different types of tax services available that can benefit a small business, ranging from annual tax return preparation to ongoing tax planning and research. A small business may also find it needs help in dealing with tax authorities after it files its returns. Here is a summary of services you may want to consider.
Tax Preparation Service
Tax preparation is preparing and filing federal, state, and local tax returns, in compliance with the tax codes. It is generally an annual or quarterly event. A preparer can be a CPA, an enrolled agent, an attorney, or a tax preparer who does not have professional credentials.
Tax Planning Service
Tax planning is applying tax rules to help business owners think through the tax effects of business decisions. Planning should happen throughout the year, not just at tax preparation time, and is usually offered by professionals. It includes how to time revenues and expenditures for the best tax outcome, and how to maximize deductions and allowable credits to minimize tax liability. It also covers decisions about what legal form a business should choose, acquisitions or divestitures of assets or businesses, real estate transactions, investments, compensation and benefits, and succession plans.
Tax Research Service
This service includes analyzing different business and financial situations for their tax and legal implications and making recommendations or coming up with solutions to specific tax problems. Answers can come from the Internal Revenue Code and U.S. Treasury Regulations, along with prior tax and legal cases and IRS decisions and publications. There are many other publications and online sources that researchers use, but they may not have the authority that regulations and cases have. An experienced tax professional offering research services can offer expertise in this area that a small business owner would likely not have.
Handling Audits and Notices
Business owners may need representation in questions or disputes with the IRS, or negotiations over taxes paid or positions taken on tax returns. The IRS or another taxing authority can send notices or letters for a number of reasons, including balances due, questions about a tax return, changes made to your return, or to request additional information. It's important to not panic and to read and understand any notice and respond by the requested date to avoid any interest or penalty charges and to preserve your rights under the laws. Tax professionals have experience reading and responding to these notices in an effective manner.
If the IRS or other tax authority notifies a business that it is the subject of a tax audit, it will likely need some expert advice. Generally, the IRS can audit returns filed within the last three years. The IRS has a set process for how they communicate and conduct their audits. Having a tax professional who is familiar with the process and how best to communicate with the IRS is critical to a successful outcome. This includes gathering requested information, preparing responses to questions on time, preparing for any meetings, advocating tax return positions, and appealing audit results, if necessary.
Tax Relief Options
If a business gets into trouble with the IRS or other tax authority, it may need help. Tax relief includes help with matters like timing of tax payments, penalties imposed (for not filing or filing late, not paying taxes or paying late, among others), tax levies on property, liens, and wage garnishments. If you cannot pay taxes you owe when they are due, you may have the option of negotiating a payment plan or offering to pay a lower amount through an offer in compromise. The IRS frequently dismisses penalties for certain reasonable causes through a tax resolution process, and a tax professional with expertise in the abatement process can eliminate penalties and interest charges. If an appeal is filed following certain protocols, the IRS may release tax levies or other liens. Dealing with the IRS can be very challenging and should probably not be attempted on your own. Tax professionals understand these options and the IRS's process and protocols.
Small business requirements for tax services vary based on the size and nature of your business. It's important to consider your needs for different types of tax services and potential tax liability by talking to your business advisors and planning ahead.