I run a small online store (sole proprietor) and have always used a tax preparer for my annual filing. Last year my revenue crossed six figures and I'm starting to wonder if I'm missing something. Do I really need a dedicated accountant, or is a tax preparer sufficient for someone at my scale? I'd rather not pay for more than I need, but I also don't want to get blindsided by a letter from the IRS or miss deductions.
Taxes
Is a tax preparer enough or do I need a dedicated accountant?
Depends on what you mean by "dedicated accountant." A CPA who does bookkeeping and quarterly reviews is different from a tax preparer whl just fills out forms once a year. At six figures youre probably fine with a preparer if your books are clean. If they're not, that's where an accountant earns their fee.
What's the difference in cost, roughly? I've only ever used a preparer too
I'd be careful assuming a preparer catches everything. Mine missed a home office deduction two years in a row because I never mentioned it. Now I pay a bookkeeper quarterly and a CPA at year end. Costs more but the peace of mind is worth it. Not saying you have to do that, but at six figures you might want someone looking at the business holistically, not just the return.
That's my concern—i don't know what I don't know. My current preparer is fine but it's pretty transactional. I send documents, they file. No one's ever asked about my inventory method or whether I should be an S-corp.
S-corp election is a whole other conversation. For a sole prop at your revenue, it can save on self-employment tax but adds payroll and filing complexity. That's exactly the kind of question a good accountant would flag. A preparer might not bring it up unless you ask.
Ask your preparer directly if they offer advisory services. Some do. You might not need a separate person.
Honestly at six figures I wish I had switched sooner. My first preparer was cheap but I later found out he wasn't even an EA or CPA. Just a guy. Check credentials before you assume "tax preparer" means anything.
Yeah, that's a big one. Anyone can hang a shingle as a preparer in most states. Make sure yours is at least an EA or CPA. That alone might change your answer.