We live in such a cool time in the history of our planet. We have so much information at our fingertips that many of us think we can do anything! We live in the Do-It-Yourself Age. Anyone can YouTube how to do something; fixing that broken dishwasher, running the electrical wiring in that unfinished basement, even building a contest-winning cake! Most of us feel we can do-it-ourselves. However, the reality is that once we really delve into the project, we realize we are in over our heads.
Case-in-point: many years ago, I tried to "fix" a leak under our kitchen sink by caulking it to death. The "waterproof" sealant eventually became not-so-waterproof and we ended up having to have a professional fix it. I was embarrassed to realize how easily the pro fixed the issue (very appreciative that they didn't laugh too hard at my handy-work), but also recognized that it would take years of practice and training for me to be as competent as they were in their profession.
The majority of us require a trained professional to save us from ourselves with do-it-yourself projects. Professionals have the training and skill-set to save us hours of wasted time trying to do it ourselves. Such is the case with small business tax services.
Out of entrepreneurial spirit or necessity, many small business owners attempt to do taxes on their own. Many even feel they "know" what they are doing, but just like a novice attempting to run electrical wiring in an unfinished basement, you might take shortcuts or do things you actually know nothing about in an effort to complete your taxes. And just as faulty wiring can lead to disaster (fire), so can lacking knowledge of relevant tax codes lead to (tax) disaster.
Most small businesses either file on Schedule C (Sole-Proprietors and Single-Member LLCs), Form 1065 (Partnerships and Multi-Member LLCs) or Form 1120S (S-Corporations). The IRS outlines the average time (in hours) and average cost (in dollars) that it takes to properly file a tax return.
Let's consider Form 1065 as an example. On the IRS website under Form 1065 Instructions (https://www.irs.gov/instructions/i1065), we find the following table:
For an average, small business (reporting under $10 million in yearly revenue), it would take someone (on average) 270 hours to complete and, assuming you are paying yourself an average wage of $16 per hour, would cost you $4,400 in actual dollars OR wasted time.
I'm going to guess that (again, on average) most small business owners do not realize that it takes that LONG to complete your small business return, nor do small business owners realize the actual cost ($4,400) or opportunity cost (wasted time they could devote to building their businesses) of preparing their own taxes (AND that's assuming they actually prepared them correctly!).
If you are a small business owner who wants to take on preparing and filing your own taxes, I would encourage you to (at a minimum) run the finished product by a tax professional. They can see in minutes what may have taken you hours to complete.
Using a tax professional through the entire tax preparation and tax filing process is a good option for most small business owners. It is worth having someone you trust take on the burden of small business tax services so that you can focus on what you do best... building your business!
Contact Summit Tax Solutions today for a free consultation. If we can't help you, we will point you in the right direction to someone who can!