Mary A. Miles

It is not necessary to have a CPA prepare your small business tax return and not all CPA’s are devoted to taxes. What you need is a tax preparer that specializes in preparing returns for small businesses. I recommend a preparer that has a background in accounting also so that they will make the correct decisions based on whether your business is cash or accrual basis and they should be able to prepare a profit and loss statement. Do your research and some background checking before making your selections. It will indicate if they have the education and experience needed to do a good job on your return.

I recommend to my clients that they practice collecting tax documents all year long. This eliminates searching for documents at tax time. Get a file folder, or large manila folder, or even a basket and collect any document (receipts, etc.) that may be a possible tax deduction. If you have the time, at the end of each month you can sort by month or expense type. But if that is not possible, just drop them in the basket so that everything will be in one place at year end.

As a self-employed or small business owner, you can file your return without a business license. However, a business license lends a higher level of recognition to the business. You can file your return and the Schedule C will capture your income and expenses for the business, Some states require certain types of businesses (ex. beverage and liquor) to have a specific license to operate. Having a Federal EIN number moves the business transactions to the business and flows to your social security number as profit or loss on the 1040.