Even if it seems like you can’t afford much of anything lately, you can’t afford not to have an accountant this year.
Yes, for your 2017 earnings, not 2018 earnings — plenty of people mistakenly think that what they earned last year isn’t affected by the Tax Cuts and Jobs Act, which is just one of the many points of confusion surrounding this coming April 15 filing deadline.
Unfortunately, even tax experts acknowledge that the most complicated — if not inscrutable — portions of the new provisions concern self-employment.
Make Sure It’s a Good Accountant
As a solo-premeur you might have noticed that accountants are making some pretty aggressive sales pitches to the self employed set. Perhaps you’ve already fallen for one of them by now.
Although that’s better than nothing, remember that just having an accountant doesn’t mean he or she is good at it — unfortunately, they don’t have to be; this field has one of the lowest unemployment rates of any profession, and there’s no system of standardization that helps people evaluate quality.
Yet, while having a bad accountant won’t kill you, it can destroy your startup: Nine in 10 startups fail, and having sloppy accounting practices can contribute to the casuses of failure. A good accountant will keep you on your toes with documentation that will help you make better business decisions.
They Use the Same Software You Do
A lot of the accountants out there just took a year off to learn how to use tax software without really gaining a deep understanding of the principles beneath them.
Yet you might not figure out whether your accountant was inept until too late: It takes two to three years for the Internal Revenue Service to catch up with errors — or call for audits — and then the longer they take to do so then the more interest and penalties you’ll owe.
Even if you go to an a top tier accounting firm, that’s not necessarily a measure of quality either. Although you can look at reviews of accountants online, but they might not be reliable.
Good Luck Filing Early
No matter how good your accountant is, he or she probably won’t be able to get you an early return this year. Perhaps you’ve noticed that payors supplied you with 1099 forms at what seems like the last possible second– like this week — instead of earlier in January (you’re also getting more of them electronically this year than last).
Rumor has it the IRS might start issuing fines for late 1099s, as a way to offset the revenue shortfall from cutting taxes, but those fines aren’t being implemented in time for this year’s filoing deadline.
Since all of this seems likely to slow down your refund, you could try to estimate how much of a refund you’ll get by using any of the dozen or so tax refund calculators available online.
Unfortunately, these online calculators don’t have qualifying language preceding them warning you that there might be errors due to the fact that so many things have changed this year.
Don’t be surprised if you get different results on different websites — and if none of the figures match what you eventually receive (or don’t) from the IRS.
Fellow entrepreneurs, do you have an accountant helping you with your taxes for the coming April 15 deadline?