How do you find a good — and affordable — tax professional for your archery business?

Finding the right professional requires an inventory of what your archery pro shop actually needs in the way of services and advice and, most importantly, how much it can afford to pay for that advice or services. It is important to determine beforehand just how much of the work you and the operation’s employees will do, and how much of it will be done by the professional — or professionals.

The Question of Who

Anyone can be a paid tax return preparer so long as they have an IRS Preparer Tax Identification Number (PTIN). However, preparers with just a PTIN can’t represent anyone before the IRS — even if they prepared the tax return.  

For any return involving as complex as those of an archery pro shop, an experienced tax professional might be required. And, the various types of tax professionals bring different levels of skills, education and expertise to the table.

Among the various types of tax professionals are accountants, certified public accountants (CPAs), enrolled agents, attorneys and others without a professional credential. Enrolled agents, CPAs and attorneys can represent the archery business in front of the IRS on audits, payments, collection issues and appeals — should it come to that.

In many cases, the tax professional hired should be able to do more for your business than preparing its tax returns. The professional should work throughout the year tracking income and spending to ensure the operation doesn’t have a cash flow problem. Many tax professionals inspect an operation’s books and records to ensure all income is being reported, and make sure the business claims all of the deductions and credits available to it. A tax professional can also help answer questions such as whether the business is subject to excise taxes or need to file employment tax returns.

The Choices

Because every archery business owner wants to use every legitimate deduction available to minimize their tax bill, understanding what everyone actually does is important. Bookkeepers, for example, are great for the day-to-day recordkeeping of the business.  

Accountants, on the other hand, usually crunch the numbers tracked by the bookkeeper, translating — even evaluating — those figures into a format understandable and usable by the average business owner, shareholder or manager. When dealing with an accountant, don’t underestimate the importance of a Certified Public Accountant (CPA).

Passing the CPA examination is frequently a guarantee of a certain level of abilities.  Those three letters are awarded only to those who have passed a rigorous three-day, nationally standardized exam.  Most states require CPAs to have at least a college degree or its equivalent.  Many, in fact, require post-graduate work.

While many CPAs advise and prepare returns, keep in mind that the CPA designation does not require a special knowledge of our tax laws. Although CPAs and attorneys are permitted to practice before the IRS and the tax courts, another group of professionals, enrolled agents (EAs), must demonstrate their knowledge of taxes in order to represent taxpayers in those venues.

The EA has successfully completed a three-day test that is all about taxes. The IRS requires a certain level of competence, adherence to rigid professional standards, as well as relying on continuing professional education to maintain those skill levels. And it is the IRS, not a local association of professionals, that tests, monitors and polices the enrolled agent.

Membership in a professional organization is a good thing to have in a tax pro, as most associations have codes of ethics, professional conduct and various certification requirements.

Typically, attorneys specializing in tax law are not ardent disciples of tax return preparation. Such legal professionals are most often confined to complex transactions, issues and document preparation. Also keep in mind that non-legal tax professionals are afforded only a limited degree of client confidentiality. For issues requiring absolute confidentiality, consider the use of attorneys who enjoy legal extremes of data protection.

When it comes to help with the preparation of the tax returns or with tax questions, the IRS offers free advice — but the IRS will not advocate aggressive tax solutions, nor can their answers be taken as gospel. In fact, the IRS will not stand behind incorrect advice or even its erroneous interpretation of its own rules.

Finding Help

Remember, the professional used for tax advice need not be the same used for preparing the archery business’s tax returns. However, some archery businesses — and their owners — may only need help with basic returns. Others may require a professional who can handle complex tax situations and be available for consultation throughout the year.

Once the scope of services required and the available options known, the best way to find someone to prepare the operation’s tax returns, or to render needed tax advice, is to get a referral from business associates, the business’s banker or attorney. 

Asking someone within the industry who they recommend can be helpful for finding a tax professional well-versed in the particular needs of a sporting goods or other retail operation. While this method is more time-consuming than a Web search, it can help ensure finding a professional who is able to expertly handle the operation’s tax returns.

Compatible

With recommendations in hand, an interview with the targeted professionals should be requested. That interview should answer questions such as:

• Is the tax professional’s style compatible with the goals of the archery business and its owner?
• How and what will be charged for the services needed? While no tax pro should be chosen based on fees alone, it pays to compare the fees charged by several professionals.
• Can the professional work with the operation’s recordkeeping, bookkeeping or POS system? If a system such as QuickBooks or other computerized tools are used, can the professional provide guidance if needed?
• Is the tax professional available for questions or assistance other than only during the tax season? Availability is crucial. Even after the tax returns have been filed, the best tax professionals will take calls, respond to emails or welcome in-person visits.  
• Does the professional prepare all returns or are they delegated to staff — and how will that affect the fees charged? In large accounting firms, there are usually many employees, ranging from CPAs to junior staff members, usually billing at different rates.
• How will the operation’s data be kept secure? Every tax professional should have systems in place to protect the confidential information in their possession.  
•  Are all returns filed electronically? With some exceptions, the IRS requires tax preparers to file electronically. Tax professionals using paper returns may be doing taxes part-time — or it could be a sign to keep looking.

Checking and Re-Checking

Keep in mind that finding the right tax professional for your archery shop is similar to shopping for a new vehicle, fixtures, computers or anything else.  At the very least, comparing fees, services provided, and compatibility, should play an important role in every search.

Tax return chains such as Jackson Hewitt, H&R Block and Liberty Tax may be able to easily handle simple returns, but they aren’t always experienced in providing in-depth tax advice or return preparation. Of course, because only CPAs and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collections and appeals, the chain tax return preparer may have to resort to a referral to someone other than the one who prepared the return.

Tax professionals who participate in the IRS’s annual Filing Season Program have a limited right to represent taxpayers at audits of returns they have prepared and signed.  For more complex returns or help with tax-reduction strategies, it is often better to go with an enrolled agent, CPA or tax attorney.

Hiring the Right Tax Pro

A good, competent tax professional can usually advise a business on the most effective way to structure the business. Even with an already-operating business, a tax professional can help the owner, partner or shareholder determine whether another type of entity might be advisable and, perhaps, reduce the annual tax bill.

A knowledgeable tax professional can also help in avoiding many tax-related scams. The IRS provides tips on avoiding unscrupulous tax return preparers and investigates paid tax return preparers who act improperly.

Remember the old adage: “if it sounds too good to be true, it probably is.” If a tax professional’s qualifications or promises are questionable, then there is the possibility that fraud may eventually result. Checking the disciplinary records and license status for credentialed preparers is important. For CPAs, a check with the State Board of Accountancy or for attorneys, check with the State Bar Association. For enrolled agents, go to irs.gov to search for “verify enrolled agent status.”

After the fact, any business owner who has been financially impacted by a tax return preparer’s misconduct or improper tax preparation practices can make a formal complaint. To report abusive tax return preparers or suspected tax fraud, the IRS’s Form 14157, Return Preparer Complaint and Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit, are used by individuals, sole proprietors and single-member LLCs to report a tax preparer’s misconduct.

Although these tax preparer complaint forms don’t let anyone off the hook for paying taxes owed, they allow every individual taxpayer, sole proprietor and single-member LLC to anonymously report tax preparer misconduct.

Shopping Around

Most businesses use a professional at some point — most commonly to prepare tax returns. In fact, according to the IRS, more than half of all returns were filed by tax professionals. However, it can’t be emphasized enough that shopping for a professional is virtually a necessity in today’s business economy.

Fortunately, many professionals offer free first meetings for discussion of expectations, services needed and provided, extent of involvement by the professional and the portion of the work the operation’s employees expects to shoulder, time constraints and, above all, costs.

For those without professional help — or those seeking to change tax professionals — finding a professional should be more than a search for the least expensive or most convenient. Although money should never be the sole criteria for selecting a tax professional, remember that it is not “tacky” to discuss fees before engaging their services.

Comparison shopping to find a tax professional who can provide the level of service required at a price that the business — and you — can afford is a process that shouldn’t be ignored or postponed.

Bottom-line, it should be kept in mind that regardless of the source of any advice or who prepares the archery business’s tax returns, it is the operation’s owner who is responsible for everything on that return.

Sidebar: A Checklist for Checking

• American Institute of Certified Public Accountants (AICPA) is the world’s largest member association representing the accounting profession. (aicpa-cima.com)
• National Association of Enrolled Agents (NAEA) is a professional society representing enrolled agents (EAs), America’s “tax experts.”  EAs earn their licenses from the U.S. Treasury Department by passing a three-part examination administered by the IRS and are required to complete annual continuing education requirements that exceed the IRS’s required minimum and adhere to a stringent code of ethics. (naea.org/ ) 
• National Association of Tax Professionals (NATP) claims to be the largest nonprofit organization with members of all 50 states focusing specifically on federal tax preparation. NATP claims its members adhere to a superior standard of professional conduct and bring excellence to the more than 12 million taxpayers they assist worldwide. (natptax.com)
• National Conference of CPA Practitioners (NCPAP) is another professional organization that claims to represent more than one million business and individual clients. NCCPA monitors and influences tax administration and tax policy by meeting with IRS representatives and state taxing authorities as well as national and state elected officials. (go.nccpap.org)
• National Society of Accountants (NSA) along with its state affiliates represent independent practitioners who provide accounting, tax, auditing, financial and estate planning and management services to 19 million individuals and businesses. NSA members are required to pursue continuing professional education to stay current on tax laws and skilled in client service areas. It also has a strict code of ethics that all NSA members must follow. (nsacct.org) 
• National Society of Tax Professionals (NSTP) professes to assist its members in attaining the greatest expertise, proficiency and competency in all areas of tax compliance, while preparing its members to be qualified to effectively provide professional tax preparation services for their clients. (nstp.org) 
• The IRS. While few organizations will provide reviews of their members, the IRS’s Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can often help in the search for professional tax help. This Information is all that is publicly available, and there are many other valid tax return preparers who have a current year preparer tax identification number from the IRS who are not listed. (irs.treasury.gov/rpo/rpo.jsf)