Preparing tax returns is a complex job capable of tiring and confusing anyone. Businesses generally hire a CPA to file theirs.
But with the rising popularity of tax preparation software, like TurboTax, business owners are exploring their options to find a compliant and inexpensive way to prepare and file their taxes.
Although TurboTax and similar programs are easy to use and give you the freedom to handle your returns independently, they have limitations.
So, the question arises: which is better to maximize your tax savings and avoid a CRA audit – TurboTax or a CPA?
Here’s a comparative analysis of their pros and cons.
This decision is crucial for a business. Unable to make up your mind? Let’s look at the advantages (and disadvantages) of each.
1) It’s Inexpensive
The best thing about TurboTax is that it’s less expensive than hiring an accountant. The price of this software package ranges from $20 to $200 per tax return, depending on the type of service you need.
An experienced CPA may charge hundreds of dollars an hour for businesses with complex returns. This attractive, budget-friendly benefit of using tax software is the reason why many small businesses choose TurboTax.
2) Turnaround Time Is Quick
TurboTax can complete your tax return calculation quickly if you have all the necessary documents. It can import and compile your tax documents conveniently, eliminating potential errors without wasting time.
By contrast, an accountant may take several days or a few weeks to complete your paperwork and file your returns.
3) It’s Easy to Use
TurboTax automates the tax return filing process to make it quick and convenient. All you need to do is enter the relevant information and the software does the rest. This simplifies even the toughest steps of tax filing which many entrepreneurs find, if you’ll pardon the pun, taxing.
4) It Can Be Used Anytime
TurboTax stores data on the cloud which makes it easy to access from anywhere at any time. Unlike accountants, who generally require that you book an appointment during their working hours, you can use TurboTax whenever you have time and an internet connection.
1) It’s Not Suitable for Complex Calculations
Businesses often require complex tax calculations to find ways to maximize savings. In that case, TurboTax might not be able to match the experience of a practicing CPA.
2) It Lack the Human Touch
Tax filing software lacks the human touch. With a CPA, you have the flexibility to make changes to the entries. You can also ask them questions related to future tax planning.
3) Separate Returns Require Separate Payments
You might be earning income from different provinces, which would require you to file different tax returns. That might be confusing. When using TurboTax in such instances, you should be prepared to pay for each return from different provinces separately when filing online.
Additionally, any changes in your current family structure, like a divorce, can impact your overall taxes.
1.You Get Efficient and Expert Advice
Even if you like to take care of your own finances, having a professional double-check your expenses, deductions and income reduces the chances of errors. You also have someone with detailed knowledge of your business and personal transactions in case you get audited.
A tax professional will be able to effectively take advantage of deductions you might overlook or not even know about.
An accountant should also be involved in all your personal and business planning. This includes scheduling quarterly reviews to ensure your records are in order. This gives your CPA the chance to advise you about your personal and business situations so you function at peak fiscal efficiency.
2. They Can Manage Complex Accounting Tasks
Becoming an accountant takes years of training and practice. This, in itself, says something about the complexity of the job.
Although there may be some simple financial tasks you can take care of, others may be too complicated to complete without proper knowledge and skills. Moreover, accounting errors are among the worst that a business owner can make, as it can result in lost revenue or bankruptcy.
3. You Save Time and Money
Your accountant wants to see your business grow, and a key way they do that is by finding unrealized savings. For instance, they will minutely pore over your monthly expenditures to determine which can be eliminated. They may also streamline your recordkeeping to make it less time-consuming. This way, when it’s time to file your taxes, they can comb through your financials and uncover all possible deductions and credits. This can benefit business owners who want to dedicate more time to improving their marketing strategies, developing products and expanding their client base.
4. They Are Tax Experts
Your tax returns might seem simple enough for you to look after, but don’t count on it.
There are many ways to reduce your overall tax bill. Business owners generally don’t have the expertise or time to utilize these methods. A tax professional will help slash your overall tax bill and save you money you can instead invest in your business’s growth.
1. There Are No Guarantees Against Mistakes
Accountants are human and make mistakes. If it’s something small that can be adjusted quickly, it’s not such a big deal. But bigger mistakes could prove disastrous. For instance, when importing expenses into an accounting program, a missed expenditure can result in missed deductions. This can unnecessarily increase your tax liability.
2. You Lose a Measure of Control
Some business owners simply dump their financial documents into their accountant’s lap at tax time. This can help get the job done, but kind of leaves you in the dark about what’s happening with your finances, unless you ask. This means you’re placing a lot of faith in someone to take care of your business.
There are no hard and fast answers when it comes to hiring an accountant or using TurboTax. Your familiarity and comfort with tax rules will play a big role in helping you decide which is best for your business. Those with few investments and a single employer may benefit from TurboTax. On the other hand, business owners with a complicated income likely require a CPA. Ultimately, it comes down to your unique requirements.
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