Reasons Not To DIY Your Tax Filing

Hello, readers! Welcome back to the Hoods Tax & Accounting blog! If this is your first time here, welcome! We’re delighted to be able to share up-to-date information about taxes, bookkeeping, and accounting. Our blog is also dedicated to educating you about tax-advantaged savings accounts, tax provisions, programs, and more! We aim to provide you with the tools needed to meet your short and long-term goals. Our seasoned professionals are experts on the tax code, eligible deductions, and QuickBooks—all necessary fundamentals for saving you money! The Hoods Family has been around since 1988 and our comprehensive accounting and tax planning services are among the best in the Lowcountry. If you are in need of tax preparation, accounting, QuickBooks training, or business consulting services, do not hesitate to schedule an initial consultation! We are officially in tax season, and Tax Day is fast approaching. We recommend preparing early to maximize your savings and refund. We do offer contactless services using a combination of over-the-phone consultations and digital drop-offs, for safety and convenience. You can read more about our hours and submit a request for a meeting using our website!

It’s now the end of October, which means there are only a couple of months left in this tax year! Make sure you have your documents ready– Don’t wait until the last minute! We are still available to help with any questions or concerns you may have. Before we get into today’s topic, we would like to make you aware that we are offering tax planning appointments to assist with questions about withholding, small business tax, retirement and investment accounts, sale or purchase of rental properties or other estates, and more! Reach out to us to set up an appointment with one of our knowledgeable tax professionals.

In our last post, we talked about everything there is to know about QuickBooks. QuickBooks is an accounting software made by Intuit and is geared toward small and medium-sized businesses. It is essentially a financial management suite with tools for everything from accounting and tax filing to payroll and budgeting, and everything in between! Here at Hoods Tax & Accounting, we are filled to the brim with QuickBooks Pro Advisors. Be sure to check out our last blog to learn more about QuickBooks, and then contact us to set up an appointment! 

Today, we’re going to talk about why you shouldn’t do your tax filing by yourself, especially as a business owner. It’s safe to say that not everyone is a “numbers person”, and that’s okay. Just because you’re an adult and need to file your taxes doesn’t mean you have to enjoy working with numbers! With that being said, it’s easy to make mistakes on your taxes– Even if you do love numbers. If you are interested in learning why it’s not a great idea to DIY your taxes, you’re in the right place. Let’s get started!

If you are a business owner, you are probably used to being a “jack of all trades”, in a sense. You probably have a variety of responsibilities, and it only makes sense that one of them would be taxes. If you’ve filed your own personal taxes yourself, you may feel confident in doing the same for your business. But is it a good idea? The truth is, it’s not a good idea for everyone. Here’s why.

Business taxes are more complex than individual taxes.

While businesses must pay federal taxes just like individuals, they also have to pay other federal, state, and local taxes. The way you file taxes for your business will depend on your business structure. For example, you may need to consider payroll taxes, issuing 1099 forms to contractors, and unemployment compensation, among other things. Additionally, individual taxpayers file their taxes once per year, while businesses must pay taxes on a quarterly basis. There are also more business tax deductions and write-offs when compared to individual filings. These may include travel expenses, office expenses, rent, and payments made to employees. With that being said, businesses will need to file different forms than an individual taxpayer would. Since taxes are more complex for a business, that means mistakes are more likely to be made. Hiring a tax professional can benefit you greatly– They can walk you through the basics and let you know exactly what documents you will need. 

Tax law changes often.

Tax laws are always changing, and it is unlikely that you will know about every single update or change, unless you stay glued to the IRS website. Not being aware of these changes can cause you to make a mistake on your tax return, and you might miss out on some pretty hefty deductions. By hiring a tax professional, you are entrusting your taxes with someone who knows the tax code inside and out and has the most up-to-date knowledge. Tax professionals know what can and can’t be deducted, and will make sure you get as much money back as possible. Of course, the tax professional you hire should have all the right credentials, and they should have experience filing taxes relevant to your situation. 

Mistakes can cost you.

If you’re not good at math, you’re probably more likely to make a mistake. Math errors can result in you paying fewer taxes than you are supposed to, in which case the IRS will require that you pay the additional amount you owe, plus interest accrued since the due date of the return. Speaking of due dates… You do not want to miss that due date. If you are filing taxes on your own, it is easy to get caught up with other things in life and let that due date slip by. Late filing penalties can add up to 25% to your tax bill, so at the very least, mark the due date on every calendar you own. It is also important to note that tax returns must be signed– If you forget to sign it, the IRS will view it as if it was not filed at all. 

The good news is that most mistakes are fixable. Most mistakes can be corrected by filing an amended return. If you realize that you made a mistake after submitting your tax return, you will need to file a federal form 1040X, Amended U.S. Individual Income Tax Return. For businesses, you may use a form 1120X, 1120S, or 1065X. For larger mistakes that are left uncorrected, you may be subject to an audit, which is time-consuming. Hiring a tax professional will help you avoid those pesky mistakes altogether! 

Google isn’t the best accountant.

When DIYing your taxes, you’re likely to have questions... What forms do I need to file? What is my adjusted gross income? What is my filing status? Chances are, you are going to turn to Google for the answers to your tax questions. Don’t get us wrong; Google is fantastic and can be helpful. However, there is misinformation out there, as well as information that is outdated, and Google doesn’t know your specific tax situation. A tax professional, however, will ask questions regarding your personal situation, get to know you, and be able to answer all of the questions you have regarding taxes! Plus, you won’t have to waste time searching for answers. 

You have other things to do.

Let’s be honest– If you have a busy schedule, you may find it difficult to dedicate the time needed for your taxes. This is especially true for business owners. Doing taxes on your own puts a lot more responsibility and stress on you. You’ll need to have the time, energy, and resources to get them done correctly, but you also need that time, energy, and resources to dedicate to running your business. With that being said, it is probably in your (and your business’s) best interest to hire a tax professional.

These are just a few of the reasons why you shouldn’t DIY your taxes. By hiring a tax professional, you can rest assured that your taxes will be done correctly and in a timely manner– And you’ll get the maximum refund possible! We hope you found this article helpful, and we encourage you to reach out to us if you have any further questions or need any assistance. Here at Hoods Tax & Accounting, our tax professionals are always eager to give our clients as much help as possible when it comes to their finances. If you have any questions regarding your taxes, or if you need help with tax planning, contact us! Hoods Tax & Accounting offers a variety of services including small business consulting, QuickBooks training, tax preparation, accounting, payroll, and more! Visit our website for more information, as well as helpful links to resources you may find useful. Thank you for reading and we hope to see you back next time to keep learning about various tax and accounting topics!