taxIt is that time of the year again; you know, the time that a lot of people dread. Whether we are talking about personal income tax or business tax, the reaction is usually the same. It is bad enough that we have to shell out money, but the process of figuring out just how much you owe the government can be taxing as well – no pun intended.

So, regarding the taxes for your small business, have you thought of doing the work yourself? After all, it can save you some money if you do not have to pay someone else to do the job, right? More so, you can get a lot of tax prep software which can help you do your taxes yourself.

According to expert Gene Marks, however, tax prep software can be very helpful only up to a certain point. He says that in reality, you would be better off taking on the services of an accountant – a real live one. His rationale? He points out some advantages of this kind of software:

It points out potential deductions, red-flags potential audit items and accurately crunches thorny depreciation calculations, all while incorporating a flurry of pesky tax-law tweaks.

On the other hand, software also has this problem:

Still, as with all computer programs, there’s the old problem of garbage in, garbage out. If the user types an incorrect number (or, more likely, doesn’t fully understand what’s being asked), he ends up inviting more trouble–and expense–than he avoids.

As such, he suggests using software to do your preliminary work and then hiring a good experienced accountant who can help you determine all possible exemptions while at the same time keeping within the limits of the law. This makes sense to me. What do you think?

Originally posted on February 2, 2011 @ 11:01 pm

Analysis, Business, Tips

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