It should be pretty obvious that an accountant who has a great deal of general knowledge in accounting and bookkeeping is better for you or your business than one who doesn’t. But how important is it for your accountant to have specific local knowledge of the tax laws and statutes that impact your personal or business tax returns? All indications are that it’s extremely important. In fact, your success may depend upon it.
The Local Tax Bailiwick
All accountants should have a firm grasp of the complicated Federal tax code. But a clear understanding of state, county and local taxation might make the difference between paying a larger tax bill or getting a deserved refund on your taxes.
The tax code for businesses is even more complex. If you own a business, you need to be concerned with a wide range of state and local business taxes, including:
- Capital stock taxes
- Corporate income taxes
- Gross receipts taxes
- Inventory taxes
- Property taxes
- Sales taxes
- Unemployment insurance taxes
Your accountant should know these inside and out.
Also, your accountant should be keenly aware of tax incentives and write-offs available for different types of businesses. New job tax credits, investment tax credits, sales tax exemptions, property tax abatements, business use of your home, capital depreciation – all of these are incentives and write-offs you’ll want to take advantage of if you can.
Hiring an accountant with a thorough knowledge of all federal, state and local taxes and incentives can give you the advantage you need to stay competitive. It’ll also go a long way toward keeping you off the audit list of any taxing authority.
Lest you believe that any old local accountant will suffice for your business, consider this: The type of business you run may experience dramatically different effective tax rates than other types of businesses. A capital-intensive manufacturer, for example, has dramatically different tax considerations than, say, a dental practice. Consider this, too: The impact of corporate income and gross receipts taxes depends heavily on the business structure you have in place.
You should look for an accountant who understands the complexity of these factors and can position you or your business to receive the tax breaks you deserve while making sure you comply with all applicable tax laws.