5 Things about Tax Consulting You May Not Have Known

5 Things about Tax Consulting You May Not Have Known

Consulting a tax advisor is a healthy routine for your business. A tax advisor manages your business’s taxes to reduce your tax payments, increase tax returns, keep you updated on tax laws, and advise you on your future tax plans. All of it is necessary for the sustainability of your business. But there are some things your tax consultant may not want you to know.

Here are five things about tax consulting you may not have known.

Your Tax Advisor May No Longer Be a Tax Expert

Like all other fields, expertise in tax advisory is gained through extensive knowledge and understanding of the ongoing trends. That means your tax advisor has to stay updated with all tax laws that often change. They may have the skills to offer you advice and plan your taxes, but not completely understanding the existing tax laws will result in a poor job.

If the Tax Advisor Makes a Mistake, You Will be on the Hook

As a business owner, you always have to deal with the mistakes made by your employees. Not all blunders are worth firing people, or even if they are, it will be you who will have to deal with and recover the loss made. Similarly, your tax advisor can make a mistake resulting in additional taxes, penalties, and interest.

If your tax advisor is completely at fault, they may be liable to pay the cost of penalties and interest, depending on your contract with them. However, the amount they cover will be limited, and the rest of the burden, including the additional tax, will fall on your shoulders.

Credentials Aren’t Always Required

Preparer Tax Identification Number (PTIN) is the only identification that tax advisors must have. Unfortunately, this identity is no proof of the tax advisor having any expertise in the domain. An unqualified tax advisor can result in significant loss to your business. You should always check the background and profile of the tax advisor to increase your chance of getting professional guidance.

CPA Is Not Equal to Tax Expert

A CPA is a Certified Public Accountant who is actually an auditor to review and analyze corporate financial statements. Many offer their services for tax advisory, and they also get hired. While they know the tax laws and regulations, they are hardly the expert to advise you on tax matters and prepare your taxes.

On the other hand, some CPAs are also experts in taxation. So if you are hiring a CPA for your taxes, ensure that they have the expertise and background to help you efficiently.

Your Personal Information May Have Been Outsourced Overseas

The financial data used for your tax preparation is sensitive. Unfortunately, some tax preparers outsource your information to other colleagues, other firms in the country, or even to overseas firms. Mindful tax consultation firms disclose this information in the contract or ask permission before sharing your data. You need to ask about such information to know what’s going on behind the scenes.