It’s no secret that preparing your taxes can be a nightmarish experience. If you’ve suffered sleepless nights, panic attacks, or stress headaches, you’re far from alone. Research shows that over half of all US adults find tax season anxiety-inducing.
But as you scramble for professional help, deciding who to turn to can be just as stressful.
How can you tell which financial expert to trust with your taxes? Can your bookkeeper tackle the task for you, or do you need an accountant instead?
Here’s what you should know about choosing the right financial expert for the job.
What Does a Bookkeeper Actually Do?
Before we dive in, it’s important to understand what bookkeepers do. It’s also important to know what makes them different from other financial professionals. Sometimes, people use terms like “bookkeeper” and “accountant” interchangeably, but they aren’t the same!
A bookkeeper is someone who works for a company to maintain its finances. This can be either full-time or through contracted bookkeeping services. Bookkeepers are trained to tackle a range of financial issues, from generating financial reports to managing payroll.
Next are accountants, who can tackle bookkeeping functions in addition to more complex financial work. Their work may include things like financial statements or in-house financial audits.
A certified public accountant (CPA), on the other hand, will have extensive tax preparation knowledge and training. They have a Preparer Tax Identification Number (PTIN), which gives them the ability to represent taxpayers with the IRS. This means they can provide detailed tax planning advice and assist with audits.
Can Bookkeepers Prepare Your Taxes?
The short answer to this question is that it depends.
In general, bookkeepers don’t bother to secure licensing from the IRS, as their work doesn’t require it. More knowledgeable bookkeepers may be able to help you prepare your taxes, but they cannot represent taxpayers before the IRS.
However, it’s not impossible to find bookkeepers who have secured additional credentials. These credentials let them tackle work beyond the basics of bookkeeping. Some financial professionals specialize in both bookkeeping and tax services, for example, allowing them to provide more robust financial advice to clients.
For this reason, it’s important to do your research to understand the background of any bookkeeper you work with. Before you partner with a tax professional, ask them about their education, experience, and credentials. If you find it important to work with someone who has a PTIN number to represent you to the IRS, be sure to ask about this as well.
Partner With the Right Financial Expert
Before you head to Google to search for “bookkeepers near me,” it’s important to understand your needs.
If you’re looking for basic financial assistance, for example, any bookkeeper will do. However, if you need specific tax help, you’ll need to find a CPA or a bookkeeper who has furthered their tax knowledge. Make sure to do your research before you partner with a financial expert!
Looking for more tips to help you make the most of your finances? For additional insights, be sure to check out our other posts.