Run it with less chaos · Every business
When to Hire a Tax Preparer for Your Small Business, and What to Bring
Most owners hire a preparer after a stressful April, while the better moment is the first year the business has its own income and expenses to report, and the right documents make the appointment shorter and the return more accurate.
General information, not legal/tax/financial advice; talk to a licensed professional about your situation.
Hire a tax preparer for your small business once the return includes business income and expenses, such as a Schedule C for a sole proprietor, or any time the business adds employees, forms a partnership or corporation, buys major equipment, receives an IRS notice or falls behind on filing. Choose a preparer with an IRS preparer tax identification number (PTIN), and if you want someone who can represent you in an audit or collection matter, choose an enrolled agent, a CPA or an attorney, the three credentials the IRS gives unlimited representation rights.
The signs it is time
| Situation | Why a preparer helps |
|---|---|
| First year with business income | Sets up categories, deductions and estimated tax payments correctly from the start |
| You hired your first employee | Payroll tax filings and records add new deadlines |
| You formed a partnership, LLC taxed as one, or S corporation | The business files its own return |
| You bought a vehicle or major equipment | Depreciation choices affect several years of returns |
| You received an IRS notice or missed a filing | A credentialed preparer can respond on your behalf |
What to bring
- Last year's federal and state returns.
- A profit and loss report for the year, or bank and card statements for every business account.
- Records of income: invoices, deposit records, payment app reports and every Form 1099 you received.
- Records of expenses: receipts, invoices and statements, sorted by category.
- A mileage log for business driving, with dates, destinations and purposes.
- Purchase records for equipment, vehicles or property bought or sold during the year.
- Payroll reports and the forms you filed, if you have employees, and the 1099 forms you issued to contractors.
- Records of estimated tax payments made during the year, with dates and amounts.
- Contributions to retirement accounts, health insurance premiums and any other deductions you plan to claim.
- A short note on anything unusual: a new location, a large refund to a customer, a loan, a change in ownership.
Item list adapted from the supporting documents the IRS lists in Publication 583.
What to check before you sign
| Check | The IRS's guidance |
|---|---|
| PTIN | Anyone paid to prepare returns must have one and must sign the return with it |
| Credentials | Enrolled agents, CPAs and attorneys can represent you in all matters; Annual Filing Season Program participants have limited rights; other preparers have none |
| Fees | Avoid preparers who base their fee on a percentage of your refund |
| Your records | A good preparer asks to see records and receipts |
| Blank forms | Never sign a blank return |
| Review | Check the return for errors before it is filed |
Why it works
A preparer who sees organized records catches errors before the IRS does, and errors in a small business return are costly when they are large. When a return understates tax by the greater of 10% of the correct tax or $5,000, the IRS can add an accuracy-related penalty of 20% of the underpayment, on top of the tax and interest, so a $6,000 understatement that crosses that threshold could bring a $1,200 penalty (calculated: 20% × $6,000). The IRS's own guidance on choosing a preparer also urges owners to consider whether the preparer will be around in the months and years after filing, since questions about a return can arrive long after April.
Sources
- Internal Revenue Service. Understanding Tax Return Preparer Credentials and Qualifications.
- Internal Revenue Service. Topic No. 254, How to Choose a Tax Return Preparer.
- Internal Revenue Service. Choosing a Tax Professional.
- Internal Revenue Service. Publication 583, Starting a Business and Keeping Records. Revised December 2024.
- Internal Revenue Service. Accuracy-Related Penalty.
Related reading: Bookkeeping for Solo Service Providers and Freelancers · What Messy Books Cost at Tax Time · A One-Hour Year-End Review for Small Business Owners
Email hello@osnovaops.com about getting your books ready
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