There are a number of terms for professionals that specialize in preparing tax returns. These include registered tax preparers, certified public accountants, enrolled agents and tax attorneys. Deciding which type you need is one of the most important financial decisions you can make. So how do you know if you need a certified tax accountant here in Minneapolis to handle your taxes?

If your tax return is complicated, you are best served by choosing a Certified Tax Accountant. If you own a business, have just gone through a complicated divorce, or handle extended family business, you should find a Certified Public Accountant that specializes in taxes. CPAs are licensed and certified to deal with a wide range of accounting issues. A Certified Tax Accountant carries that one step further by focusing on the ever changing rules of the IRS and the State of Minnesota.

Before you Choose a Certified Tax Accountant

Your first step should be to consult with a Certified Tax Accountant and assure yourself of several things:

Qualifications – What is their Preparer Tax Identification Number? New IRS regulations require all tax preparers that receive a fee to have a valid PTIN. Does this person hold a current CPA? All CPAs are required to retest every few years to maintain their certification.
History – Check with the Better Business Bureau to ensure they have been no complaints against them. It is also wise to check with state boards of accountancy for certified public accountants and the IRS Office of Professional Responsibility for enrolled agents. This will assure you there are no disciplinary actions and the tax accountant’s license is valid.
Fees – Do not use Certified Tax Accountants that base their fees on a percentage of your refund. One should also be cautious when they make claims to be able to obtain larger refunds than other Certified Tax Accountants.
Availability – Ensure that the Certified Tax Accountant will be accessible. Will you be able to contact them after your return has been filed should questions arise? You should have a sense this is a person who will be there for you should you require representation before the IRS.
Questions – Reputable Certified Tax Accountants will request you to provide appropriate records and receipts. They will ask an array of questions to properly determine your income, qualifications for expenses, deductions, and all other necessary information.

Once You Have your Certified Tax Accountant

Never sign a blank return
Oversights can happen, but a tax preparer should never let you leave without signing all forms. Conversely, avoid Certified Tax Accountants that ask you to sign a blank tax form.

Review the entire return before signing it
Read everything and ask questions about anything you don’t understand. If there is anything recorded that makes you feel uncomfortable, don’t sign until those issues are addressed.

Make sure your Certified Tax Accountant signs the form and adds their PTIN
Paid preparers are required by law to sign returns and include their Preparer Tax Identification Number. Your Certified Tax Accountant must also give you a copy of your return for your records. Do remember: it is your responsibility to ensure all information provided is factual and accurate.

There are many things your tax preparer can do for you in ensuring your tax returns are accurate and that you have claimed all proper deductions. However, there are also a number of things you can do for yourself that can lessen your tax burden.
By working with your employer, you can get a head start on tax planning here in Minneapolis. Here are some options for tax-free income your employer can provide. Be sure and check with your tax preparer about all of these to make sure they apply to you.

Education

An employer can provide as much as $5,250 per year in educational aid when you enroll in undergraduate or graduate courses. As long as your employer doesn’t mind, the IRS makes no requirements the education is job related. That means you can take advantage of continuing your education with what amounts to a tax-free pay raise.

Public Transportation or Parking

If you use public transportation to go to work an employer can purchase fare tickets, tokens, or passes for you. Up to $230 per month is tax free for funds spent on the bus, subway, train, vanpool, or ferry. If you commute by car to work and pay parking fees, up to $230 per month can be reimbursed tax free by your employer. If you ride a bicycle to work your employer can reimburse you $20 a month, tax-free, towards the cost of repairs, maintenance, and storage.

Carpool

If you own your car and use it to carpool fellow employees to work, you can deduct commuting expenses from your tax bill. This does not apply if you travel alone. But any monies paid to you by your fellow carpoolers for gas, repairs, and other operating costs are not counted as taxable income. Unlike the other deduction mentioned here, this is not tax free income paid by your employer but rather by passengers in your car pool.

Health Insurance Premiums

If you aren’t insured by your employer and your insurance premium is $3,360 annually, or $280 a month, your real cost is much higher than that. With this premium, the actual cost would be $4,480 per year. If you are insured through your employer, you both achieve the same benefit. The employer pays less in salary and your income increases because the insurance payments are fully deductible. Additionally, payroll taxes on insurance premiums do not apply.

Term Life Insurance

An employer is allowed to pay premiums for your term life insurance coverage, up to $50,000. The employer can deduct the cost and you gain tax-free income.

Here are some additional reimbursements you can receive from an employer that are considered tax free:

• $5,000 for child care assistance
• Adoption assistance and reimbursements
• Meals provided at the workplace
• Athletic facility privileges
• Cash rebates from dealers or manufacturers
• Health Savings Account contributions
• Gifts, bequests, and inheritances
• Worker’s compensation
• Welfare benefits
• Retirement planning services
• Court-awarded compensatory damages

Again – Be sure and check with your tax preparer about all of these to make sure they apply to you!

Many people are not aware that the Internal Revenue Service does not certify tax preparers. And, though many states require their own licensing requirements, Minnesota does not. This quick guide to choosing a certified tax preparer in Minneapolis will help you as you seek the right person to handle your tax returns.

Your Options

Since Minnesota does not mandate licensing requirements it is important to ensure the tax preparer you choose can handle your needs. Options to choose from in a professional tax preparer include:

• Chain and local storefronts – Nationally advertised chains such as H&R Block and Jackson Hewitt as well as locally owned storefront operations are often manned by preparers with a wide range of qualifications. Some are credentialed CPAs while others may have no certification at all. Should you be audited, the person that prepared your tax return may not be authorized to represent you before the IRS.




• Certified financial planners – Many organizations now offer certification for a “certified financial planner.” Tax preparers with this designation often have expertise in investments, financial planning, and taxation. But such certifications do not guarantee expertise in tax preparation and representation.




• Enrolled agents – An enrolled agent must pass an exam strictly on taxes administered by the IRS. An enrolled agent is certified to represent you before the IRS and in tax court.
• Certified Public Accountants – Many CPAs specialize in taxation and can represent you before the IRS. Be sure and choose a CPA who specializes in tax preparation.

Always Ask Questions

Whoever you chose as your tax preparer will become your front line of representation before the IRS so be sure and ask some probing questions before making your choice. When choosing a certified tax preparer in Minneapolis, be sure and get the answers to the following questions.

• Do you know the requirements of all the states where I am required to file? – If you have just moved from another state, live in Minnesota but operate a business in another state, or have any financial interests in others states, this is the first question a tax preparer must answer.
• How much experience do you have with my type of return? – If you have a simple 1040, then almost any qualified tax preparer will do just fine. But if you have a family trust, a partnership, or other business ventures, makes sure the tax preparer you choose has current experience with your particular needs.
• Can you represent me if I am audited? – Not only will this answer if this person should represent you, but it will allow you to find out how often his or her clients have been audited. Someone who generally prepares normal 1040s should have very few audits. While business and certain high-risk taxpayers will received more audits, the percentage of audits should still be relatively low.
• What and how do you charge? – Find out if charges are by the hour or by the form and what extra fees apply to organizing your records. Also ask if such charges will be specified in writing.

You’re the Boss

Remember; the tax preparer you choose is working for you. Don’t hesitate to establish what you expect. Good communications is essential, so make sure your preparer is ready to call you should questions arise. You don’t want anyone jumping to conclusions without calling you first. If a tax preparer has to make a judgment call in a complex return, insist it be made known to you in writing.

The odds of ever having to deal with an auditor in your Minneapolis business are statistically low. But odds are never comforting if you are the one being audited. Like it or not, the Internal Revenue Service has legal grounds to audit any tax return it chooses for any reason it chooses. Therefore, it always pays to be prepared.

What many tax payers do not understand is that an audit is not personal. Most audits are initiated as the result of an IRS computer system score in which a taxpayer has a high likelihood of inaccuracy. If an IRS official reviews such a return and agrees it should be examined then an audit will follow. Such audits are intimidating because the burden of proof rests on the taxpayer. The person audited must prove the information on their return is accurate and the taxes paid were appropriate.

It isn’t sufficient for your return to be accurate. You must prove its accuracy. Because this is so important you must respond to an auditor the best way possible. Here are some things to remember if you are contacted by an auditor.

NEVER

Panic – Reacting with anger or panic to an IRS audit is only natural. We have all heard horror stories of how an auditor dealt with a business. But, negative emotions are only counterproductive and can lead to bad judgment.

Represent Yourself – People facing audits often only turn to a professional after first attempting to represent themselves. A CPA or Enrolled Agent will often charge more if you have already attempted to represent yourself because of the time they will spend in undoing damage already done.

Charge an IRS Auditor with Harassment – Unless the auditor is completely out of line such charges usually cause more harm than good. If an auditor is acting inappropriately, you should have your certified representative take a complaint directly to the auditor’s group manager or supervisor.

Misrepresent or Lie – Though lying to an auditor may not lead to a criminal referral, it almost always will increase the likelihood of an unfavorable resolution of your case and may expand the audit to earlier tax years.

Sign Anything without Consulting With a Qualified Representative – Never sign anything for an auditor without first speaking to an attorney or a certified tax representative. Auditors or required by law to permit you to consult with a tax advisor whenever you ask for it and particularly before you consent to any tax adjustments or extensions or waivers.

ALWAYS

Respond Immediately – Cooperation always counts in your favor! Whenever you avoid or defy the process, an auditor will assume you have something to hide.

Be Respectful – No taxpayer ever won by making enemies of an auditor.

Consult with your Tax Preparer – After promising to deal with the auditor in a timely fashion your next step is to have the person that prepared your taxes to go over your file with you. Look for detailed explanations of how the preparer arrived at the figures on your return. Reputable preparers will not charge you for this in the case of an audit.

Assemble Organized Records – Preparation and organization enhances your chances of a favorable outcome.

Consult with a CPA or Tax Lawyer – Handling an audit by yourself is unsafe because the risks in the process are too great.

Finding the right tax accountant for your Minneapolis business may be the most important long-term business decision you ever make. The decision of choosing the tax accountant that is both qualified and a match for you and your business is critical. Because your business’ future is directly connected to its finances, it is essential to trust your tax accountant.
Here are a few tips for finding the right tax accountant for your business.

• First, determine what type of tax accounting needs your business has. Look for a tax accountant that specializes in dealing with businesses similar in size and operation to yours. A small business has different demands and needs than of a large corporation. The right tax accountant is one that understands your kind of business.
• The tax accountant you choose needs to be comfortable dealing with the unique financial demands presented by your business. If you are a high volume seller with multiple vendor and customer accounts, your tax accountant should have experience in dealing with such complexities.
• Choose a tax accountant like you would any other employee or independent contractor. Interview multiple candidates, ask directed questions, and check out credentials to find the person most qualified to manage your tax records and filings.
• Certification is essential! The Internal Revenue Code outlines strict rules of tax accounting as found in Section 446 of the IRC. Those rules stress consistency in tax accounting and call for the use of recognized methods of financial accounting. Certification ensures a tax accountant is current with the complexities of those tax codes. An interview should begin with determining if your candidate is certified by a recognized public organization. Qualifications and certifications should be easy to find on every tax accountant’s web site.
• A prospective tax accountant needs to have a good understanding of annual changes to tax laws and codes. Choose a tax accountant that has significant experience handling business tax preparation. The very last thing your business wants or needs is an audit by the state or Internal Revenue Service.
• Determine how much charges will be and whether payments are scheduled on an hourly rate, monthly work, or an annual fixed fee. Be sure and ask what is included in the accountant’s basic rate plan and what services might cost extra. The lowest rate does not always mean the right choice for you.
• Always ask for and check client references. This not only ensures a candidate’s qualifications but also gives you a grasp of the kind of clients he or she is used to working with.
• Make sure the tax accountant you choose is comfortable with the type of accounting software you use.

By following these simple guidelines you will find the right tax accountant for your Minneapolis business. It is important to take the time to find an accountant you are comfortable with because this is one person you will depend on heavily throughout much of the business year. You are opening up the financial heart of your business to someone outside the business so it is important you see your choice as someone you are willing to build a bond of trust with for well into the future.

Why you Need an Accounting Firm for your Minneapolis Business

It doesn’t take long to realize you need an accounting firm for your Minneapolis Business. Rapidly changing tax codes, insurance reforms, and general economic conditions along with countless other variables dictate that no business is too small to need professional assistance.

One advantage a local accounting firm here in Minneapolis can offer is current knowledge. Accountants are professionals who stay abreast of what is going on outside your business. They stay current while you do what you do best, run your business.

The January 5th 2011 edition of the Wall Street Journal detailed 10 reasons businesses fail. This is the type of information your accountant will be aware of and pass along to you. Why do businesses fail?

Because the Math Doesn’t Work: Sometimes there isn’t enough demand for your service or product to allow a price high enough to produce reasonable profits. A start-up electronics company, for example, that has nothing different than Best Buy doesn’t make economic sense.

Owners Get in Their Own Way: An owner cannot be averse to risk or conflict. They also cannot afford to be insecure or think they have to know everything about everything. The key is to find an accounting firm you trust and proves to be reliable, let them do their job, and focus on your business.

Uncontrolled Growth: Sometime too much success can end up being the ruin of an otherwise promising business. This happens when a business overextends its credit so it can enter new markets or expand. Sometimes less is more and a good accounting firm will remind you of that.

Poor Accounting: A company working with bad numbers is like a plane flying blind. Even if you have a good accounting firm, there needs to be someone managing the accounting wheel of your business internally. It is a common misconception that an outside accounting firm hired primarily to do the taxes will keep watch over the business. Watch over your own finances and contract with a full service accounting firm.

Too Little Cash: The past recession should have taught every business owner that business is cyclical. Really bad things can and do happen over time. Markets change, important customers jump to a competitor, key employees leave, and lawsuits are filed. All of these realities and more can stress the finances of any company. If that business is already low on cash and therefore borrowing, it may not be able to recover.

Operational Mediocrity: No business owner thinks he or she is just average when it comes to handling their business. But the truth is few business owners are good at everything. What sets great business owners apart is that the great ones recognize when they need a consultant or other outside help.

Operational Inefficiencies: This includes things like paying too much for materials, labor, and rent. Lean companies are at a distinct advantage in these turbulent economic times.

Dysfunctional Management: Businesses with leadership that have lack of planning, vision, focus, and standards are headed for trouble.

No Succession Plan: Too many business owners have no real plan in place to guarantee the business will move on after them. Power struggles, nepotism, and people in over their heads are all reasons many small businesses do not make it to the next generation.

Declining Market: Printing businesses, music stores, book stores, and many others are facing major changes in consumer demand, technology, and competition from giant companies with more buying power and huge advertising budgets.

CPA Firms in Minneapolis and their Advantage to You

The CPA has evolved from the stereotypical “bean counter” in green shades to a professional that can help a business grow and chart its successful financial future. CPA firms in Minneapolis offer a wide range of professional services that range far beyond the traditional ledger sheet. Some CPA services that offer a distinct advantage for your business are:

Banking Relationships – CPAs that work in Minneapolis have formed close associations with the local financial community. They also are aware of the current business atmosphere of the area. As a result CPA firms in Minneapolis can leverage banking relationships to help you in obtaining financing on a temporary or long-term basis.

Insight into Your Business – It’s a CPA’s job to understand your business. It is important for your CPA to spend time with you and your employees. It is the only way they can have an accurate picture of your financial situation and how to make it even better.

Budgeting– Most businesses require a budget and a CPA is trained to know how to work with you to design the best one possible. Even when well planned, budgets are not intended to be inflexible. Various influences can create the needed adjustments throughout the year. Your CPA can offer expert advice on how to stay the course while making those minor changes.

Insurance Coverage and Risk Assessment – Because CPA’s are attentive to their other clients’ businesses and have often assisted them in obtaining coverage, they are often a good first line of advice concerning insurance coverage. They also have gained a fair amount of understanding from the mistakes they have seen other clients make along the way. The CPA works with the insurance agent in helping you get the best coverage that is right for you, your business, and your family. This real world knowledge is invaluable in offering direction for your business.

Business Specific Needs – Larger CPA firms often have partners that specialize in specific industries or fields. Some are best known for working with lawyer support services, health care, publicly traded companies and the construction industry. Other CPAs may specialize in not-for-profits or as tax specialists.

Mergers and Acquisitions – You CPA firm in Minneapolis can be an invaluable asset during times of selling your business, acquiring a new business, or during a merger. The CPA assisting you during these times will monitor the progress of such transactions and offer advice on various rules and regulations.

As you can see, the role of a CPA has become much more than balancing ledgers or preparing taxes. The right CPA becomes a partner in making your business work as efficiently and effectively as possible.

Finding the right accountants in Minneapolis for your business can be challenging. A number of factors are involved in choosing an accountant most important of which is often simply how well you feel you can work with the ones you are considering. Whatever factors go into making your decision, it is important to settle on them before beginning your search.

Factors to Consider When Searching for Accountants in Minneapolis:

Certification

While not all businesses require a Certified Public Accountant, most will do well to have one. All CPAs have an undergraduate degree and have met specified experience and examination requirements for their state certifications. To maintain their CPA status they must also take continuing education courses, generally every three years.
Some businesses serve themselves well by also considering a Certified Management Accountant or CMA. Accountants with this certification must also pass strict and continuing certification but have additional certification for participating on the company’s management team. CMAs must have business experience and are often a good choice for young, growing companies in need of someone with business experience to consult on internal control functions.
Other common certifications accountants might have include Personal Financial Specialist (PFS), Accredited in Business Valuation (ABV), and Certified Valuation Analyst (CVA).

Specific Industry Expertise

Some accounting firms specialize in specific industries such as construction, auto dealerships, retail, and non-profits. Other accounting firms choose to partner with networks of firms in order to refer to accounting industry specialists when needed. Having a great accountant may not be enough when your specific industry calls for specialized accounting expertise.

Size

Accountants and accounting firms come in all sizes from sole practitioners to national recognized marquis firms. While choosing one of the Big Four accounting firms may seem an obvious choice it may be a mistake to overlook smaller local firms. The main qualification for a CPA is that you feel that he or she is a good fit for your business. It is also important to be aware that those larger firms often contract work out to smaller accounting firms. If you choose one of them make sure you know who is actually handling your account.

Complexity of your Business

Your decision must take into consideration the kinds of accounting services your business requires. Some businesses require their accountant to confirm the validity of their financial statements to outside parties such as banks.

The Importance of Interviews and Reference Checks

Remember that small businesses cannot afford to make a mistake when choosing an accountant. That person or firm will have access to the company’s books, records, and other proprietary information. It is essential that you take the time to interview candidates. Check if they have experience in your industry, your size of company, and software sophistication. When interviewing firms, ask to meet with all staff members who will be handling your account. Finally, always check references. Choosing an accountant is a far too important and lasting decision to leave anything to chance.

While most businesses need the services of an accountant or CPA, every business regardless of its size must have some set of accounting practices. An accounting system tracks and manages both the expenses and income and of a business. They can be as uncomplicated as a pencil and notepad or as multifaceted as the accounting staff of a national firm that employs the most up-to-date technological advancements.

For small business owners, adhering to a set of fundamental accounting principles is an effective way to gain experience in handling your business’ accounts. When the time comes to contract with a new accountant, both of you will be glad you did. Here are some straightforward tips on accounting and finance for your Minneapolis small business.

Posting Transactions

In the past, accountants made use of financial documents to enter transactions manually into the different accounts in a business’ accounting system. To some extent this remains true but a great number of businesses now take advantage of technological solutions to post transactions automatically. For example, ordering software can be set up to automatically adjust accounts in the accounting system by way of a company’s network. In such a case, an you must still keep track of financial documents for verification of accounting records and if any discrepancies should need to be investigated.

Collecting Financial Documents

Good financial records are critical to any sound accounting system. Both small and large businesses establish and maintain systems that ensure that all expenses and income are recorded in some manner whether, electronically, physically or both. Essential financial documents include invoices, incoming bills, cash register tapes, travel receipts, salaries, and tax forms and records. Financial documents may come from a varied range of employees and locations. Every business needs some system that ensures all financial documents are recorded and protected in the event they are needed in the future.

Accounts Payable/Receivable

Accounts payable is comprised of all monies owed by your businesses to its lenders and suppliers. Accounts receivable is the process in reverse, consisting of all monies owed to your business by customers and other debtors. A systematic accounting methodology involves systems of keep track of the due dates and statuses of both accounts payable and receivable. This is often set up to automatically pay bills when due or send out notifications when account holders are.

Account Reconciliation

Comparing your accounts to external records should be a routine activity in your accounting process. By checking internal records of business assets against bank accounts and investment portfolio statements you will be alerted to any differences between the two. The same is true of comparing your accounts payable records and checking account statements with your suppliers’ records.

Internal and External Reporting

Creating reports for partners, investors and other business shareholders is a critical function in any accounting system. Internal reports are necessary for the decision making process as you study trends and areas of potential improvement. Publicly traded corporations are required by law to submit a range of financial reports to federal authorities throughout the year, including the annual report, Form 10K.

Your business may be small but it too needs solid and discernible financial records. The ability to create reports for discerning trends in income and expense are often invaluable to the small business owner in particular.