You don't. Not unless you read on your own (like this GuideSite) and keep up to date on changes. But who has time to do that? So what's the answer to this dilemma?
In my research on the issue of owners as employees for yesterday's blog post, I found a post by the Wandering Tax Pro that stopped me short. He said he had received many incorrect tax documents from clients, some of which came from CPAs who should have known better.
A Reader Horror Story
One reader responded to my question: "Have you ever had a bad experience with a tax preparer or legal advisor?" with this story:
What Happened?
I had a bad experience with an attorney who cost me a lot of money when I set up a corporation. He helped me set up the corporation, then he was supposed to take care of filing the Sub-chapter S election. I figured you could trust an attorney to do what he's supposed to. Turns out you can't. Because he failed to take care of the election, I had to pay taxes at the corporate rate, which was much higher than the rate for the sub-chapter S.
What Did You Do?
I had to find another attorney, but it was too late for the election for that year, so I had to wait until the next year. The whole experience was costly because I had to pay two attorneys and for other corporate expenses.
Lessons Learned
We all know we should never "ASSUME" and what it means. Even though I figure an attorney should take care of things without being told, I will never ASSUME again. If there was something your attorney is supposed to do, don't hesitate to call and remind that person to do it, especially if you are a new client.
Do You Have a Business Advisor Horror Story?
Share your story with other readers. And check back to see what others have said; maybe you'll pick up some good advice.
Before you decide on a tax preparer:
- Check credentials. Check with the professional organization (the American Association of CPA's or the American Bar Association, for example) and see if the person holds an active license and if there have been any sanctions against this individual.
- Check the IRS website. Search to see if this tax preparer has been disciplined by the IRS.
- Check references of previous clients. To avoid getting only friends of the preparer, ask for a list of 20 people so you can select a few at random.
- Check the Better Business Bureau, to see if there have been complaints filed against this preparer.
For More Information
How to Find a Good Tax Advisor
Selecting and Working with Business Advisors