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Business success is dependent on a solid financial foundation & success looks different to everyone & there is a lack of equity of access to resources and information for small business owners and independent contractors & there is a societal narrative making us believe “balance” is our ultimate goal & … There are so many “&”s that impact being your own boss. Let’s have some frank discussions on the basics of business with a holistic focus on everything that helps business owners define and find success.
Molly: [00:00:08] Welcome to The Ambiguous &: Business Basics and Beyond, the podcast where we have frank discussions on the basics of business with a holistic focus on everything that helps business owners define and find success. Each episode is a reminder that success isn't one thing. It's a whole lot of ambiguous ands. Like subscribe or follow and let's explore these ambiguous ands.
Molly: [00:00:35] Hello and welcome to The Ambiguous &: Business Basics and Beyond. I'm your host, Molly Beyer, and I'm here to lead you through frank and holistic conversations on the basics of business. Today, we're talking about something that confuses a lot of people, and understandably so. Tax professionals: who they are, what they do, and how to choose the right one for you and your business. Whether you're a solopreneur, just getting started, a growing small business, or someone staring down a stack of IRS letters wondering who can help, this episode is for you. I want to take a holistic approach to this conversation, not just with what the IRS says, but what you might need to think about as you make financial decisions, as you're building your business, or if you're just trying to feel more confident about your money. Now, before we break down the rules, I want to say this. I've worn a lot of hats in this world. I've been the client. I've been a tax professional. I've also been the bookkeeper and coach, guiding other clients through their financial foundation.
Molly: [00:01:34] And I've seen the difference it makes when you have the right person in your corner. I've also seen what happens when someone chooses a preparer who wasn't equipped for their situation, and suddenly they're getting IRS letters or scrambling to amend old returns. Or worse, they're operating their business based on completely inaccurate numbers. That's why this matters. And that's why this conversation is more about just more than just forms and credentials. It's about trust, alignment and protection. So let's get into it.
Molly: [00:02:04] There are four main types of tax professionals, and we're going to walk through the most common types that you're going to encounter: who they are, what they do and what makes each of them the right or wrong choice, depending on your needs. We're going to start with the most common people here are CPAs or certified public accountants. CPAs are licensed by their state boards and their certification process is truly no joke. It requires a combination of education, testing, and continuing education. And that's the technical piece. But what really makes a good CPA invaluable is their breadth of knowledge. They don't just do taxes, they can also help with financial planning, business strategy, audit prep, budgeting, and yes, of course, tax preparation and planning. CPAs have unlimited representation rights before the IRS, which means if you're audited, they can go with you. They can speak on your behalf, and they can advocate for your interests. They are often the best fit if you have a complex financial situation. If you have multiple income streams, business income, investments, or if you're scaling or need someone to help you plan ahead, not just our file 'what's already happened?'. That said, not all CPAs are tax experts. Some focus more on audit or corporate accounting or forensic accounting. So make sure that your CPA actually specializes in small business or personal tax if that's what you need.
Molly: [00:03:30] Our next class of tax professionals are EAs or enrolled agents. Let me tell you, these folks do not always get the credit that they deserve. An Enrolled Agent is someone who passes a rigorous IRS exam covering individual and business tax law, or who work directly for the IRS for a number of years and earned their credential. That way, they're superpower is laser focus on taxes. They aren't general accountants. They are tax specialists through and through. Like CPAs, they have unlimited representation rights before the IRS, and they are often more accessible both in availability and in cost, especially for small business owners. EAs are a great option if your needs are mostly tax related, especially if you need help navigating a tax issue like back filings, penalties or payment plans. And I honestly tell people all the time, if you're going to get hung up on letters for your tax pro, don't get hung up on CPA, get hung up on EA.
Molly: [00:04:27] Our next level is tax attorneys. These are the people you might want on your side when things have gotten serious. Tax attorneys are licensed lawyers who specialize in tax law. And while some may actually prepare returns, their real strength is in the legal advice for this. Think you're being investigated? You're facing potential criminal charges? You need to sue or be represented in tax court. You are restructuring a business to minimize tax liability legally. Tax attorneys are the highest level of tax representation you can hire, but they're also the most expensive and generally not necessary for everyday tax prep or even standard audits. You probably won't need a tax attorney unless your situation involves legal complexity or IRS disputes that go beyond numbers and into law.
[00:05:16] Our final is non credentialed tax preparers. These are folks who prepare taxes but don't hold a formal license like CPA or attorney. They might work at a chain tax preparation company. They might file taxes part time. They might have their own business for tax and or bookkeeping or accounting, or even be the go to person in a community that helps folks get their returns done for a good price. There's no one size fits all here. Some non credentialed preparers are excellent and have been doing taxes for decades. Others are a little less reliable. What you need to know is they typically have limited representation rights, meaning they can only speak to the IRS about returns they've personally prepared and signed. They are often best for simple returns, W-2 income, standard deduction, basic credits. If you're self-employed, own property, have dependents in multiple households, or have received IRS letters before, it might be worth upgrading to somebody with deeper credentials. That doesn't mean these preparers are bad, but they aren't always equipped to guide strategy, identify risk, and represent you if things get complicated.
Molly: [00:06:27] So now that we've highlighted the less reliable side of this coin, we're going to highlight the excellent side with highly qualified, highly skilled tax professionals without the letters. And I have one. She handles taxes for me in my business as well as a number of my clients, and is one of my go to tax referral partners. Now, if I'd gotten hung up on letters, I would not have ended up with the amazing help that I have. There is also a shortage of CPAs and EAs taking clients, and your only option may be working with somebody who's a non credentialed tax professional. But please don't let that stop you from having a conversation. Ask a million questions. Ask for references. Chat about their experience in education. And remember these are long term relationships. So make sure that you like them. Now there are some other programs and options. A couple of categories I want to just mention briefly. There's the annual filing season program participants. These are non credentialed preparers who've done some training with the IRS and have slightly expanded representation rights.
Molly: [00:07:30] They sit somewhere between volunteers and credentialed pros. We also have the Vita and TCE volunteers. So if you meet certain qualifications like low income or being a senior, you can access free basic tax help through IRS sponsored programs. These folks are well-trained and well-meaning in an absolute excellent option for folks who qualify. So how do you choose the right person? Let's bring this back down to earth. Here, you want to ask a few questions before choosing your tax professional. You want to ask yourself what the complexity of your tax situation is. Is it simple? Is it W-2 income? No dependents? You may not need a credentialed pro. Do you have a business? Do you have investments? Do you have past IRS issues? Then maybe you want to go up a tier. Do you need more than tax prep? If you're looking for tax planning strategy or business advice, a CPA or EA who does proactive guidance is key. Am I looking for representation or just filing support? If there's any chance the IRS might reach out, or if you've got back filings or penalties, make sure your professional has unlimited representation rights so that CPA or tax attorney, if it's that intense, you also want to ask, 'what's my budget? And what also is the cost of getting it wrong?'. It might feel cheaper to go with somebody offering low rates, but if they miss deductions, if they file incorrectly, or if they leave you unprepared for an audit.
Molly: [00:08:59] That cost can be much higher later. You also now want to know how they're going to work with your current accounting team. Whether it's you, a manager, an assistant, a bookkeeper, a family member, whoever is handling the book of your business accounting day to day. It's important to know how that collaboration will work, because your tax professionals should be a partner, not just a processor. You want someone who understands your goals, who can help you navigate not just what's required, but what's possible. And especially for small business owners, solopreneurs, and those of you trying to build something sustainable. Don't wait until tax season to connect with your tax professional. Build the relationship now. Get strategic, ask questions, stay informed. The right tax pro doesn't just fill in boxes. They help you see the bigger picture and build a stronger foundation underneath the work you're doing.
[00:09:51] Thanks so much for hanging out with us today. We'd love to hear your feedback on today's episode, as well as requests for future content. Drop a comment or suggestion and join us next time for more frank and holistic conversations on the basics of business. Please also like, subscribe or follow so you never miss an episode. And until next time, I'm Molly Beyer and this has been The Ambiguous &: Business Basics and Beyond. Have a wonderful day!