How to Choose a Qualified Tax Advisor

How to Choose a Qualified Tax AdvisorChoosing a qualified tax advisor can be a challenge for businesses as well as the individuals who operate them.

It’s important to understand that not everyone who prepares taxes is qualified to offer advice. It may be tempting to simply stop into your local office of a big national tax preparation chain in your search for a tax advisor. However, because there are no national educational or professional requirements, nor is a license is required, it is important to find out about the training and experience of any individual you’re considering.

Fortunately, there is a wide range of tax professionals such as enrolled agents, accredited tax advisors, accredited tax preparers, certified public accountants and attorneys who specialize in tax matters. Most of these professionals are required to meet the educational standards of their profession, often including continuing education requirements to ensure their knowledge remains current.

Enrolled Agents (EA) An EA is a preparer approved by the Internal Revenue Service to represent taxpayers before the IRS. To obtain an EA credential, the individual must pass both a rigorous two-day exam on federal taxation and related matters as well as a background check, or must have been an IRS employee within certain qualifying categories. An EA must meet ongoing continuing education requirements in tax regulations and accounting methods.

Accredited Tax Advisor or Accredited Tax Preparer An Accredited Tax Advisor is one who is prepared to handle complex tax planning issues such as planning for owners of closely held businesses and highly compensated individuals; choosing retirement plans; performing estate planning; as well as preparing tax returns for businesses and individuals. The Advisor has taken a Master’s-level, six-course program administered by the National Endowment for Financial Education, and may also be an EA.

Certified Public Accountants A CPA has a college degree or equivalent work experience, has passed a state professional qualifying exam and meets other state licensing criteria. CPAs are highly skilled in accounting methods, but before engaging a CPA, be certain that the person you’re considering is also experienced in handling tax matters and is enrolled in a continuing education program to keep updated on the ever-changing tax laws.

Public Accountants Anyone in the public practice of accountancy can be considered a public accountant. In some states, accountants are regulated by a state agency. Accountants may also be accredited by the Accreditation Council for Accountancy and Taxation and use the name Accredited Business Accountant. While many public accountants also are EAs, before hiring one, it is important to determine that the individual has a solid background in tax matters. Finally, be sure to verify their credentials.

Tax Attorneys Tax attorneys generally appeal to taxpayers who are interested in legally sheltering a portion of their income. Like CPAs and EAs, many tax attorneys are qualified to provide advice on related tax matters from municipal bonds to estate planning, and, if specialized, are well informed on tax laws and their applications. However, tax attorneys generally charge the highest fees of all categories of tax preparers.

Select your tax advisor based on your needs, then review your choice periodically to be sure you’re getting the best guidance for your situation.

For more guidance on managing taxes related to your business, contact the Economic Development Collaborative-Ventura County. Conveniently located in Camarillo, California, we’re here to help!

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