Certified Public Accountants (CPAs) do small business tax returns. But sometimes bookkeepers prepare tax returns as well. For your company tax preparation, should you use a bookkeeper or a certified public accountant?

Many would look at cost first. The Certified Public Accountant will probably have a greater hourly charge than a bookkeeper. The Certified Public Accountant may be fast. However, the entire fee will probably be more with a Certified Public Accountant (CPA). Use a bookkeeper then? Not so fast. There is more at stake than the tax preparation fee. The CPA may be more equipped to find all possible tax deductions. Especially if you have a more involved tax return. If your only income is as an employee and you have no possible deductions, a bookkeeper, or some other low cost alternative may be the best choice.

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This does not mean your tax will definitely be less. You could owe more if the tax return is prepared by a Certified Public Accountant. The Certified Public Accountant may be mindful of limitations on deductions unknown to the bookkeeper. The bookkeeper may include the deduction, resulting in lower initial tax. An audit, tax penalties, and interest may follow as a result. All your tax preparation fee savings, and significantly more could be gone.

So far, we have discussed the actual return prepared only. Certified Public Accountant tax preparation could result in future tax savings, versus bookkeeper tax preparation. By completing your tax return, the Certified Public Accountant (or bookkeeper), will become familiar with your small business.

With this knowledge of your finances, the Certified Public Accountant (CPA) may be more adept to provide sound tax advice and future tax savings than the bookkeeper. Again, if your return is more complicated, CPA tax preparation is more vital. A Certified Public Accountant can do to reduce your tax obligations if you own a small business. If you are an employee with no deductions, a Certified Public Accountant is not required for your tax preparation.
A specific case may illustrate. I completed a tax return for a client. As part of my service, I reviewed prior returns which were prepared by a different tax preparer. One return had a substantial net operating loss (NOL). The NOL occurred in a tax year where taxpayers were allowed a NOL carryback of five years. Though the return was technically correct, the importance of the NOL was not conveyed to the taxpayer. Prior to the statute of limitations expiration, I prepared amended returns to utilize the NOL, resulting in a large refund from a couple returns, four and five years earlier. The taxpayer received a refund of over $44,000.

It may be helpful to consider your tax preparation fee similar to fee you pay for other insurance. It is improbable that you home will suffer a great casualty loss (e.g. fire) next year. Appropriate insurance could result in a substantial savings if there was a fire. If there is no fire, you still have piece of mind through this insurance. Likewise, you probably will not receive an additional refund of $44,000 just because you hired a CPA. The small additional fee, however, is your best protection from making a large error on your return. Thus, there is more piece of mind.