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Three Things You Should Look For When Hiring A Tax Professional

Feature image of a tax advisor and a client in a one-on-one meeting for an article entitled “Three Things You Should Look For When Hiring A Tax Professional.”
Three Things You Should Look For When Hiring A Tax Professional

Welcome to the world of tax advisors, where experienced professionals provide reliable guidance to help you navigate the complex landscape of taxes. Just as a mentor shares wisdom and a friend boosts your spirits, a great tax advisor can relieve the stressful burden of tax season and taxable life situations.

With piles of paperwork and countless questions, having a trustworthy tax professional becomes essential. But in today's challenging times, finding a reliable expert may seem difficult. How can you identify the ideal tax advisor near you—someone who possesses the necessary qualities to handle your tax concerns?

In this article, we will discuss the key qualities that make a tax professional trustworthy. We will uncover the reasons why you need their guidance, exploring the intricate details of taxes that demand their expertise.

Together, we will delve into the world of tax advisors, empowering you with the knowledge to find the perfect ally for your financial journey. Let's begin this enlightening quest to understand the essence of exceptional tax advisors and the invaluable role they play in your life.

Why Work With a Tax Advisor?

Collaborating with a tax advisor, like a certified public accountant (CPA) or tax consultant, offers numerous benefits and advantages. Here are some reasons why you might consider working with a tax advisor:

The image includes six icons on top of each reason why you need to work with a tax advisor with simple descriptions below.
The Main reasons why you need to work with a tax advisor.

1. Maximizing Tax Benefits: A tax advisor can help you identify and take advantage of all eligible deductions, credits, and tax-saving strategies. They can optimize your tax return to minimize your tax liability and maximize your potential refunds.

2. Expertise and Knowledge: Tax advisors, such as CPAs or tax consultants, possess in-depth knowledge of tax laws, regulations, and the ever-changing tax landscape. They can provide valuable insights and guidance tailored to your specific financial situation.

3. Complex Tax Situations: There aren’t many words in the English language that are scarier than tax audit. Naturally, nobody desires to undergo a thorough examination of their financial affairs by the IRS. However, having a tax consultant by your side to provide guidance and assist you in correctly filing your taxes will provide some relief, allowing you to breathe a sigh of relief once Tax Day has passed. If you have complex financial circumstances, such as investments, rental properties, or international income, a tax advisor can navigate the complexities and ensure accurate reporting, reducing the risk of errors or penalties.

4. Time and Stress Savings: By entrusting your tax matters to a professional, you can save valuable time and reduce stress. They handle the intricacies of tax preparation, deadlines, and paperwork, allowing you to focus on other priorities.

5. Audit Support: In the unfortunate event of an IRS audit or tax dispute, a tax advisor can provide guidance, represent you before tax authorities, and help navigate the audit process, increasing your chances of a favorable outcome.

6. Preparation for Multiple Sources of Income Taxes: Having multiple income sources or running a business introduces complexities to your tax situation. Dealing with 1099s, additional tax forms, and other issues you haven’t encountered before, like filing quarterly taxes, can arise. A tax advisor can offer expert guidance, help reduce your tax burden, ensure adherence to tax regulations, and assist you in making well-informed financial choices regarding your income and business activities.

Three Things You Should Look For in a Tax Advisor

When seeking a tax advisor, it's crucial to select someone who possesses expertise, experience, and a comprehensive understanding of taxation processes. Here are three key qualities you should look for in a tax advisor:

 The image consists of icons representing the three essential factors to consider when hiring a tax advisor for your business: qualifications and certifications, legitimate experience, and proactivity in planning. Each icon is accompanied by a brief description.
Seeking a tax advisor can be a stressful task for any business owner, as their expertise can significantly impact the business. Therefore, it is crucial to follow these three main points on what to look for in a tax advisor.

Qualifications And Certifications

A competent tax advisor should possess a deep understanding of tax laws, regulations, and procedures. They should stay updated with the latest changes in tax legislation and be able to apply that knowledge to their specific situation.

Look for professionals with relevant qualifications, such as certified public accountants (CPAs), Enrolled Agents (EA), or tax attorneys. Their expertise ensures they can provide accurate advice, identify potential deductions or credits, and optimize your tax planning strategies. These credentials are also required to receive a PTIN from the IRS that allows them to file tax returns on your behalf.

Legitimate Experience

Tax situations can vary greatly depending on individual or business circumstances. It's essential to find a tax advisor who has experience working with clients in similar situations to yours. Having a CPA or EA designation does not solely mean that the tax advisor is good at what they do.

It is always advisable to find a tax advisor who specializes in business taxation related to your scope of business. Such an advisor would have in-depth knowledge of the unique challenges and opportunities that arise in that particular area. Ask about their track record and if they have successfully handled cases similar to yours.

Proactive Planning

A tax advisor should proactively communicate with clients for various important reasons. He shouldn’t be reactive.

Firstly, tax laws and regulations are subject to frequent changes, so keeping clients informed about these updates helps them stay compliant and make informed decisions.

When a tax advisor is proactive, he or she can properly understand the income trajectory of the client’s business as well as the financial plans and investments, which can help him give accurate advice on various strategies to mitigate taxes.

Additionally, effective tax planning requires staying ahead of deadlines, and proactive communication ensures clients are aware of important dates and can avoid penalties.

Moreover, proactive communication helps identify tax-saving opportunities that arise from changes in financial situations or new incentives, enabling clients to optimize their tax position.

Proactive communication also allows for real-time decision-making by providing timely guidance on financial choices with tax implications. Building trust and confidence is another benefit, as effective communication demonstrates the advisor's commitment to the client's success and fosters transparency and collaboration.

Furthermore, addressing concerns and questions in a timely manner alleviates anxiety and confusion.

Additional Qualities Required of a Tax Professional

The image also includes other qualifications you should consider when hiring a tax professional to handle your business taxes. These six additional key factors complement the three main points and include characteristics such as availability throughout the year, a good understanding of your financial objectives, reliable consistency, dedication to addressing tax inquiries, and a demonstration of trustworthiness in handling sensitive financial information.
Always remember to add the smaller considerations to your checklist when assessing a tax advisor. Addressing these finer qualities will ensure you won't encounter any troubles concerning tax purposes. While these additional qualities may not be the primary factors to consider, having them possessed by your tax advisor can make your work much easier than you might have imagined.

Available throughout the year

Having a tax advisor available throughout the year offers several advantages. Firstly, it allows for proactive tax planning, maximizing tax efficiency by implementing tax-saving measures in advance.

Additionally, a tax advisor provides guidance on financial decisions with tax implications, ensuring informed choices align with long-term tax goals. They also assist with tax compliance, helping to meet deadlines, maintain records, and file tax returns correctly to avoid penalties.

Overall, a year-round tax advisor fosters continuous tax optimization, compliance, and informed decision-making.

Good comprehension of your financial objectives

A tax advisor's understanding of your financial objectives is crucial for several reasons.

Firstly, it allows them to align their strategies and recommendations with your specific goals, tailoring their advice to help you achieve those objectives effectively. They can devise strategies that prioritize tax savings within the context of your goals, such as increasing savings for retirement or a major purchase.

Secondly, a tax advisor with a good understanding of your financial objectives can provide personalized guidance. They consider your short-term and long-term goals, assess the potential tax implications of different financial decisions, and offer advice that supports your objectives. This ensures that tax planning and compliance efforts are aligned with your overall financial plans.

Lastly, a tax advisor's comprehension of your financial objectives enables them to provide holistic advice. They consider how tax planning fits into your broader financial picture, including investment strategies, estate planning, and risk management. This integrated approach helps you make well-informed decisions that consider both tax implications and your overall financial well-being.

Reliably consistent in their approach

Maintaining a reliably consistent approach allows a tax advisor to ensure accuracy, compliance, fair treatment, predictability, efficient services, and a strong reputation, all of which are vital for their client's financial well-being and trust in their expertise.

A consistent approach ensures accurate calculations, documentation, and reporting, reducing the risk of errors and promoting compliance with tax laws. This helps clients avoid penalties and audits.

By applying consistent guidelines and standards to all clients, a tax advisor ensures fair and equitable treatment, eliminating any perception of bias or favoritism. This builds trust and confidence in the advisor-client relationship.

Following a consistent approach enhances efficiency and effectiveness in providing tax services. Streamlining workflows, minimizing errors, and delivering high-quality advice become easier, allowing advisors to focus on personalized assistance for their clients.

Dedication to addressing your tax inquiries promptly

A tax advisor should be dedicated to addressing your tax inquiries promptly for timely compliance, maximizing deductions and credits, planning and optimization, peace of mind, and building a strong relationship.

A tax advisor helps you with your tax questions and concerns so that you can fulfill your tax responsibilities on time. They provide you with accurate and current information to ensure you stay compliant with tax regulations.

You can also get guidance on eligible deductions, credits, and exemptions that can potentially reduce your tax liability.

Effective tax planning is an ongoing process that requires timely advice. By promptly addressing your inquiries, a tax advisor can assist you in making informed decisions regarding investments, business structures, retirement planning, and other financial matters.

Tax-related matters can be stressful, especially if you're uncertain about certain tax implications or obligations. When a tax advisor promptly addresses your inquiries, it provides you with peace of mind and can make your relationship with each other stronger.

Remember, it's important to establish clear communication expectations with your tax advisor from the beginning, including response times and preferred modes of communication. This ensures that both parties become aligned and can work together effectively to address your tax inquiries promptly and efficiently.

Demonstrates trustworthiness in handling sensitive financial information

Tax advisors must demonstrate trustworthiness when dealing with sensitive financial information for several important reasons.

Firstly, maintaining confidentiality is crucial, as tax advisors have access to clients' highly confidential and personal financial details. By assuring clients that their information will remain undisclosed and secure, tax advisors can build strong relationships based on trust.

Secondly, tax advisors are bound by legal and ethical obligations to protect client information. Adhering to laws and regulations regarding client confidentiality is essential to avoid legal consequences, reputational damage, and loss of trust from clients and the wider community.

Thirdly, trustworthiness is a core component of professional integrity for tax advisors. Clients rely on their expertise and expect them to provide accurate advice while handling financial matters responsibly. Demonstrating trustworthiness reinforces the commitment to act in clients' best interests, enhancing their professional reputation.

In summary, trustworthiness is crucial for tax advisors in handling sensitive financial information as it ensures confidentiality, compliance with legal and ethical standards, professional integrity, protection against vulnerabilities, and fosters strong, long-term client relationships.

Questions To Ask When Hiring A Tax Preparer

The image showcases ten questions you can ask a tax advisor when hiring a tax preparer, listed in boxes.
You can use the following questions during the interview when hiring a tax professional.

What are your qualifications and credentials as a tax preparer?

When choosing a tax preparer, the PTIN alone doesn’t guarantee that a certain type of preparer is the best choice for your tax filing needs. There are important differences among tax professionals when it comes to “representation rights—the tax preparer’s ability to represent their clients on matters related to audits, payments, collection issues, and appeals.

How many years of experience do you have in preparing taxes?

While experience alone doesn't guarantee excellence, it often indicates that a tax advisor has encountered a broad range of tax scenarios and has developed the skills necessary to handle complex tax matters effectively.

However, it's also essential to consider factors such as ongoing professional development, staying updated with tax law changes, and the ability to adapt to evolving tax landscapes.

Are you familiar with the specific tax laws and regulations relevant to my situation?

Being familiar with the specific tax laws and regulations relevant to your client's circumstances is crucial to providing accurate, compliant, and tailored tax advice. It enables you to navigate the intricacies of the tax system, identify tax-saving opportunities, and ensure your clients' tax affairs are managed effectively.

Do you have expertise in handling tax returns for individuals or businesses similar to mine?

A tax advisor with expertise in handling tax returns for individuals or businesses similar to their client brings industry-specific knowledge, familiarity with common deductions and credits, an understanding of industry-specific challenges, and efficient tax preparation processes.

This expertise enhances the quality of advice, compliance, and tax planning strategies, ultimately benefiting clients by maximizing tax savings and minimizing risks.

What is your approach to staying updated on changing tax laws and regulations?

By adopting a proactive approach that combines continuous education, subscriptions to tax publications, monitoring official tax authority websites, networking, utilizing online resources, collaborating with peers and experts, and participating in internal training, tax advisors can stay updated on changing tax laws and regulations.

This approach allows them to provide accurate and timely advice to their clients while ensuring compliance with the latest tax requirements.

What tax software or tools do you use to prepare returns?

It's worth noting that the choice of tax software or tools may depend on factors such as the size of the tax practice, the specific needs of clients, the complexity of tax scenarios, and personal preferences.

Tax advisors often select software that aligns with their practice requirements, integrates with other accounting systems they use, and provides the necessary features to deliver efficient and accurate tax services.

How do you ensure accuracy in tax calculations and minimize the risk of errors?

By adopting a systematic approach, leveraging technology, staying updated, cross-checking data, implementing quality control measures, maintaining accurate documentation, pursuing ongoing professional development, and seeking expert advice when needed, tax advisors can enhance the accuracy of tax calculations and minimize the risk of errors in their practice.

Are you available year-round to address any tax-related questions or issues that may arise?

While it may incur additional costs to have a tax advisor available year-round, the potential benefits often outweigh the expenses, especially for individuals or businesses with complex tax situations.

However, for individuals with straightforward tax affairs, using a tax advisor on an as-needed basis or during the tax filing season may be sufficient. Ultimately, the decision depends on your specific needs, financial situation, and the level of support you require.

Will you personally handle my tax preparation, or will it be delegated to someone else?

Ultimately, the decision on whether your tax advisor should personally handle your tax preparation or delegate it depends on your specific needs, preferences, and the capabilities of the tax advisor and their team. It's advisable to have a detailed discussion with your tax advisor to understand their approach and ensure that it aligns with your expectations.

How do you prioritize client confidentiality and protect sensitive financial information?

Tax advisors can demonstrate their commitment to maintaining client confidentiality and protecting sensitive financial information by implementing strong security measures and following the practices below:

  1. Legal and Ethical Obligations

  2. Written Agreements

  3. Secure Storage

  4. Limited Access

  5. Data Encryption

  6. Secure Communication Channels

  7. Employee Training

  8. Technology Security Measures

  9. Disposal of Information

  10. Continuous Compliance


When hiring a tax professional, it is crucial to consider several important qualities and factors because they will severely impact your tax preparation process.

By considering the qualities mentioned in this article and asking the right questions, you can find a trustworthy tax advisor who will provide valuable guidance, ensure compliance with tax laws, and help optimize your financial well-being.

Here at Compass CPA, PC we can make sure that your tax season will never be compromised.

Book a call with us now!

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