Why DIY Tax Returns And Bookkeeping Are A Bad Idea
Whether you’re a business, corporation, or individual (above the age of eighteen), paying taxes to the government is mandatory. To ensure your tax filing process is efficient, you must practice sound bookkeeping. However, if you lack expertise in bookkeeping and tax filing, it’s essential to enlist a professional to handle these processes.
Attempting to maintain your own books and prepare your own taxes without sufficient knowledge of the rules and requirements can lead to unnecessary and costly outcomes. To give you an idea of what could go wrong, Bruce T. Hall, CPA & Associates, has explained why DIY tax returns and bookkeeping are a bad idea.
1. You may miss tax deductions or credits
Tax deduction and credit refers to the amount you can deduct from the total taxes that you owe to the government. Unfortunately, if you aren’t careful while preparing your taxes, you could miss tax credits, which can be a significant amount of money. A professional will maximize deductions between parent and children’s tax returns with school credits, which many forget to consider.
2. You could post amounts to your accounts incorrectly
If you do your own accounting but are unaware of the steps to prepare your accounts, you could post entries in the wrong accounts and cause your income to be much higher than it is. This will require you to pay more taxes to the government.
3. You won’t be able to rely on your financial information to make business decisions
When you prepare your accounting records incorrectly, you can not rely on them to plan your future, make investments, or make business decisions. If you do not know how much income you earned at any particular time, you will not be able to make educated decisions like when to cut costs. In addition, you could pay more in taxes, which means your business will have less cash to operate from.
4. You may receive letters from the IRS
If you furnish incorrect financial details in your tax returns, you could receive letters from the IRS (Internal Revenue Service), that require you to rectify your tax information, show proof of your expenses, or pay a penalty. To solve the problem created, you’ll need to get a professional to help you out. This can be more costly than getting a professional accountant in the first place as you will now need to pay them to straighten out your books and records while also handling the procedures to rectify your problem with the IRS.
Do things right - Hire a professional
To accurately prepare your books and file your tax returns, you need to have the knowledge and skills to maintain them correctly. If you don’t, it’s best to enlist a professional who meets the requirements for these tasks. The ultimate professional to reach out for help with your bookkeeping, accounts, and tax preparation, is an enrolled agent, certified public accountant (CPA), or an accounting expert with sufficient background in accounting.
These professionals possess the necessary knowledge and expertise to ease your accounting and tax burdens. Moreover, they will enable you to save time and money. With them handling everything from start to finish, you can focus on what you want to like your business operations, personal plans, and professional skills.
For the best accounting professionals around you, reach out to Bruce T. Hall, CPA & Associates. We are a full-service accounting firm in Pittsburgh, Pennsylvania. We serve clients across Pittsburgh, Monroeville, Oakmont, New Kensington, Homestead, and Murrysville, Pennsylvania. We are dedicated to providing our clients with professional, personalized services and guidance in a wide range of financial and business needs. At the same time, we are open to teaching them about our processes, so they have more control over their accounts.