Episode 119: Why you shouldn't prepare your own tax return as a business owner (Top 5 reasons)

In this enlightening episode of “Therapy for Your Money,” we had the pleasure of hosting Emily and Julie Herres. Both experts dive deep into the intricacies of state taxes, the importance of hiring tax professionals, and the potential pitfalls of self-preparation. Their insights are particularly valuable for those in the counseling and therapy fields, aiming to strike a balance between their passion for helping others and the practicalities of running a profitable business.

The Complexity of State Taxes

Emily emphasizes the complexity of state taxes, noting that they can be even more intricate than federal taxes. She points out, "Your state taxes are probably even more complex and unique than the federal taxes." As businesses expand or deal with clients and employees across state lines, understanding multi-state apportionment becomes crucial. Julie adds, "Multi-state apportionment is extremely complex...every state has a different formula for it." This underscores the importance of being well-versed in the tax requirements of not just one's home state, but potentially multiple states.

The Value of a Tax Professional

Both Emily and Julie champion the benefits of hiring a tax professional. As Emily states, "Your tax professionals can help you save money and save tax." They are equipped with the knowledge of all possible deductions, tax credits, and strategies that can be leveraged to one's advantage. Julie further elaborates on the potentially costly mistakes one might make when self-preparing, such as missing due dates or filing the wrong tax form. She mentions, "Filing the wrong return...can be a really, really expensive mistake."

Time is Money
One of the standout points of the discussion is the value of time. Emily succinctly puts it as, "It's not worth your time." For business owners, especially those in the therapy field, their expertise lies in their practice, not in tax preparation. Julie observes that successful practice owners surround themselves with experts in various fields, allowing them to focus on what they do best. She notes, "They are not trying to be experts at everything."

Tips:

• Always consider the implications of state taxes, especially if you have a presence in multiple states.
• Invest in a tax professional to avoid costly mistakes and to ensure you're maximizing your deductions.
• Prioritize your time. Focus on your core competencies and let experts handle specialized tasks.

LINKS & RESOURCES
GreenOak Accounting - www.GreenOakAccounting.com
Therapy For Your Money Podcast - www.TherapyForYourMoney.com
Profit First for Therapists - www.ProfitFirstForTherapists.com
Profit First Academy - www.ProfitFirstForTherapists.com/Academy