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tax software vs preparer

Tax Software vs. Tax Preparer: What’s Right for Your Business?

DIY or ask a pro? It’s a question that’s been asked in just about every household — maybe about painting, maybe about plumbing, and in a few unfortunate cases, electrical work.

But right around this time each year, small business owners start to ask the same exact question: about their taxes. Specifically: “Should I use tax software, or should I use a tax preparer?”

There’s no universal right or wrong answer here — everything comes down to your own business’s circumstances. So today, we’re going to talk about the strengths of each, and when it might make sense to even consider both.

Tax Software’s Advantages

1. Automation and Accuracy

Tax software has earned a reputation for automating complex calculations and helping individuals achieve better filing accuracy than they could achieve on their own. These tools’ sophisticated algorithms can help small business owners navigate intricate tax codes and perform calculations swiftly. And most importantly, they can reduce the occurrence of errors that arise from manual data entry.

2. Cost-Effectiveness

Many small business owners opt for tax software because of its cost-effectiveness. Small and midsize businesses often operate on tight budgets, and tax software simply provides a more economical option compared to hiring a personal tax specialist. Importantly, these tools also offer a range of packages, allowing businesses to choose a solution that aligns with their specific needs and financial constraints.

3. Time Savings

Time is money, and smaller businesses need all the spare time they can get. Tax software can shave many precious hours compared to manual tax prep. Automated data entry, instant calculations and the ability to generate reports swiftly contribute to a streamlined tax filing experience.

4. Accessibility and Convenience

There’s a certain convenience to tax software, which allows you to access your tax information from anywhere (provided you have an internet connection). This level of accessibility enhances convenience, allowing business owners and finance teams to collaborate seamlessly, even if they are not physically present in the same location. This benefit has only become more important in today’s era of remote work.

Tax Preparers’ Advantages

1. Expertise and Guidance

Personal tax specialists bring a wealth of expertise to the table. Their in-depth knowledge of tax laws and regulations allows them to provide businesses with valuable insights and strategic guidance that tax software simply doesn’t offer. Having a professional who understands the nuances of tax planning can be instrumental in maximizing deductions and minimizing liabilities.

2. Tailored Solutions

Unlike generic tax software, personal tax specialists can tailor their approach to meet the unique needs of each business. They can provide personalized advice based on the specific industry, size, and financial goals of the business. This customized approach ensures that businesses receive targeted solutions that align with their individual circumstances.

3. Handling Complex Situations

Some businesses face complex tax situations that may require a nuanced understanding of tax laws. Personal tax specialists are equipped to handle such complexities, offering solutions to intricate issues that tax software might be challenged to (or simply can’t) address. This is particularly crucial for businesses navigating intricate tax scenarios or undergoing significant changes, such as mergers and acquisitions.

Striking the Balance: When to Combine Both

Tax software and personal tax specialists each have their distinct advantages. Because of that, there are scenarios where combining both solutions makes the most sense for small and midsize businesses.

1. Comprehensive Tax Strategy

Businesses aiming for a comprehensive tax strategy can benefit from leveraging both tax software and personal tax specialists. The software can handle routine tasks and calculations, while the tax specialist focuses on developing a strategic approach to optimize the overall tax position of the business.

2. Periods of Transition or Change

During periods of significant change — such as the expansion of the business, mergers, or changes in ownership — bringing on a personal tax specialist can be invaluable, even if you typically use tax software. They can navigate the complexities associated with these transitions, ensuring that tax implications are managed effectively.

3. Compliance Assurance

Compliance is paramount for businesses operating in highly regulated industries. Combining tax software with the expertise of a personal tax specialist provides an extra layer of assurance that the business is adhering to all relevant tax laws and regulations.

Seasoned Tax Help When You Need It

Whether you want to roll with an experienced tax team all year, or simply bring in help when it’s needed, you’ll want to find a firm that focuses on your needs. And that’s where McManamon & Co. comes in.

McManamon & Co. provides creative, innovative and proactive tax advice that keeps your company on Uncle Sam’s good side. Our comprehensive tax service includes federal, state and local tax obligations, as well as payroll taxes for both the business and business owners. We also offer compliance services, including preparing tax returns for businesses, individuals, estates and trusts.

If you want to make sure your company is always prepared for what the IRS throws your way, call us at 440.892.8900 or contact us online.

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