Finding a good (tax) man
By Cora M. Barnhart • Bankrate.com

Aug. 12, 1999 -- Many business owners decide they would rather concentrate on running their business than completing paperwork. While hiring a full-time accountant seems like an obvious way to accomplish this, handing over tax chores to a professional isn't a decision to be entered into lightly.

Regardless of actions taken by a trusted expert, business owners are ultimately responsible for any taxes owed by their businesses. This tax tip offers some advice to business owners looking for a tax professional.

Wisdom from someone who should know
The IRS doesn't recommend specific tax professionals. However, in How to Choose a Tax Preparer, it does offer some tips for selecting someone: Ask friends and family members for leads on reputable preparers and find out who does the competition's taxes (they will be more familiar with tax consequences specific to the particular business). Any preparer who is obtained needs to be easy to find in the future. If the IRS examines the return, it is likely to have questions about how it was prepared.

If someone guarantees a refund before looking at any financial records, look out! The IRS also recommends avoiding anyone "who claims to have a special relationship with the IRS."

Even though the law requires paid preparers to sign returns and complete the preparer area of the form, responsibility for accuracy of the form ultimately falls on the taxpayer. A business owner should never sign a blank form or sign in pencil. And he should receive a copy of any completed returns.

Decide what kind of help is needed
Malcolm Makin at Fidelity recommends taking the time to determine exactly what kind of help is necessary since background, experience and licensing vary among tax professionals. Someone likely to encounter problems with the IRS should consider an enrolled agent or certified public accountant.

Enrolled agents have passed an exam on tax law. They are legally authorized to practice before the IRS, meaning an enrolled agent can represent a taxpayer who is audited. A CPA has an extensive background in economics and finance, and has passed a rigorous national examination. CPAs are also authorized to represent clients before the IRS.

There are also highly trained tax attorneys who focus on the more complex areas of tax law. A professional like this would be appropriate for a business owner with income from a variety of sources. If the taxpayer has initiated a complicated tax shelter to avoid taxes, a tax attorney would be most likely to recognize it and know if it is likely to attract unwanted attention from the IRS. He may also know a better way.

There are also tax professionals at the other end of the spectrum, with little formal training or experience. They basically complete forms. While they are likely to be less expensive, Makin reminds business owners that it is important to understand that these people can't represent an audited taxpayer.

Twenty questions
Should a relieved business owner just hand off his records once he gets a good lead on a tax preparer? Absolutely not. Makin recommends taking the time to interview the tax expert. Ask specific questions about background, experience, licenses, and of course, cost.

A business owner should find out if the professional has other clients in his particular industry and, if possible, get the names of two or three current clients that can be contacted later. Also ask whether the expert represents his clients in an audit, and what, if any, additional fees he will charge to do so. Finally, inquire whether he has ever been professionally reprimanded or encountered any other regulatory problems.

Once the return is completed, Makin recommends double checking certain items:

• Make sure the name and address are correct
• Check Social Security numbers and the like for accuracy
• Compare the return for the current year with the return from the previous year. Ask the preparer to explain any differences that seem confusing.
• Make sure that income figures match those on the W-2 forms.
• Check to see that the preparer has signed the return -- and sign it yourself.

Believe it or not, Makin says, "The IRS reports that the number one error in filing is failure to sign the return."

Business owners with additional questions should contact the American Institute of Certified Public Accountants at 800-862-4272.

-- Posted Aug. 12, 1999