If you’ve filed a tax return anytime in the past few years, you probably know that computer programs have become an alternative way to get your filing done. Rather than visiting an office, you’re able to download the program onto your own home computer, or maybe even work with one that’s purely online. Liberty Tax services include that kind of online program – we call it e-smart tax. But what’s the difference when you use one of these online, non-human programs to get your taxes done? Do they have an advantage over a human prep worker?
Computers Approach Taxes Differently
When you sit down with any program, you’ll notice that it doesn’t start by asking to see your various forms. Instead, it runs down a list and asks you whether you do or don’t have information to enter there. This represents the fundamentally different process used by software. Step into a Liberty Tax franchise, and you’ll sit down with a human preparer who isn’t restricted to asking specific questions. But that’s all a computer knows how to do. They aren’t equipped to look at your documents and suggest potential credits or deductions based purely on that information. What they can do is consider a credit or deduction and compare your completed return to a checklist of necessary conditions or disqualifying conditions. In short, a human can use inductive reasoning. A computer has to be deductive.
A Human Tax Preparer Learns From Experience
When you sit down with a human, you’re not just getting the knowledge that he or she learned during whatever courses they took. You’re benefitting from the sum total of all the knowledge that they’ve gained as a result of their entire career. This is something that you just won’t see with a computer. Have there been changes during this tax season? A Liberty Tax franchise employee will know them because they’ve been working with returns already. But if you purchase software, there’s no guarantee it will be updated. The Liberty Tax services e-smart tax does, but many others don’t, or aren’t guaranteed to.
At Liberty Tax, we don’t require that our new entrepreneurs have experience managing a tax business. We believe that having a strong customer service ethic is more important – you can learn the rest! These are some of the tips we share with our first time owners to help improve their success in the first year, boost their Liberty Tax franchise, profit, and serve the community and their customers.
Budget Carefully From The Beginning
Money is a very precious resource for any new business, and spending it carefully is absolutely key. Here’s one of the first things we teach the owner of a new Liberty Tax franchise: profit is seasonal, but expenses are year-round. Keeping track of how much you take in, how much you spend out, and what you’re going to need in the future is crucial.
Know The Business Cycle
The tax business is a cyclical one. It’s seasonal, just like you’d find at a resort town. There is going to be some business year round, but nothing like what you can expect during the first four months of the year. People receive their tax forms between the first of the year and the 31st; no later, or the employer is derelict in their duties to mail. That schedule means that the first part of the year is invariably the busiest for any tax preparer, Liberty Tax or not. You’ll see another big spike right at the beginning of April as people realize that they need to file before the deadline.
Time Your Opening
Having everything ready to go in time for that all-important January 1st date is key. You want to be established, a known source to everyone who lives in the area. Having a strong showing during that time is a crucial indicator of your performance throughout the rest of the year.
Taxes aren’t necessarily fun for everyone, but they can be a fascinating and very engrossing topic. Whether you want to learn about them for curiosity, for a potential future as a tax preparer, or because you view it as your duty to know the codes that impact your money, there are a few good ways to get started.
Look For A Structured Program
Even if you have some prior tax knowledge, starting out with a structured course is a good idea. A course walks you through a particular topic, even if it’s just a general survey. If you’re walking yourself through, there’s a good chance that you’ll end up getting confused or potentially missing important connections between deductions, credits, and tax situations. Liberty Tax offers a lot of programs like this, starting with our basic tax classes. Even better, they’re completely free and offered through your local Liberty Tax franchise as well as online.
Make Sure You’re Getting Good Info
If you are seeking out information on your own, be sure that it’s coming from a reliable source. The IRS website can be convoluted and difficult to understand and navigate, but all of the information contained on it comes directly from the source. It’s from the IRS, which means it’s reliable and completely correct. If it’s not on that site, you should be certain to check the origins of the info. If it’s on the Liberty Tax site, you can trust that it’s been vetted by professionals to make sure it’s accurate – and it’s a lot better organized than the same stuff on the IRS site.
You Don’t Have To Spend
Not all good courses cost money. For example, you could take a basic tax course at your local Liberty Tax franchise without paying for instruction. If you were to take a similar course at a local community college, you’d almost certainly need to front at least an administrative fee, if not a more expensive charge. Seeking out good educational sources outside of the community college or university system may end up being a better option if you’re looking to learn and save money at the same time.
Owning your own business is a difficult, yet rewarding experience. We understand there’s a lot to manage, and if you’re new to the process, it’s easy for things to slip through the cracks. But even though you’ve got a lot on your plate, there’s one thing that should always be at the front of your mind from the very beginning: taxes. If you don’t address them early and keep on top of them, they can pile up and become at the best a hassle, and at worst a legal problem waiting to happen.
Make Sure You Pay Estimated Tax
One of the most surprising facts that newly self-employed individuals don’t know is that they are expected to file quarterly estimated taxes. The government relies on tax revenue for its operations throughout the year – it isn’t all collected at the end of the year in April when returns are due. If you were previously a salaried employee, your employer probably took care of everything in advance and just deducted it automatically from your paycheck. Now that falls on you to take care of. If you need help, don’t hesitate to contact Liberty Tax. We’re available year round to assist you, even outside of tax season.
Keep Meticulous Records
Self-employed individuals are at a much higher risk for audits than their employed peers. There are a couple of reasons for this, including the naturally more complex forms they are required to file and the higher potential for inaccuracies and improper documentation. If you are audited, having the data to back up what you state on your report is absolutely vital. Track everything you do. Record it exactly, never approximate, and always have backups. When it comes time to do your filing, you’ll be prepared and able to provide exact statements that can be confirmed objectively.
Know Your Deductions And Credits
The government wants to help encourage small business owners to grow new enterprises, so you could be eligible for substantial deductions and credits on your taxes. If you’re not sure how to find these opportunities on your own, Liberty Tax services can help. We’re fully qualified to assist our customers who are self-employed, including providing tips and tricks that might make a big difference in your filing. At your local Liberty Tax, services include complete filing of your documents, taking the pressure off you completely.
Even though the economy is looking up, a lot of people are trying to cut costs this tax season. Some people view paid tax prep as a luxury, not a necessity. But is that the right view? Can you really complete your taxes accurately on your own, with no assistance?
Creating An Accurate Filing Isn’t Easy
Understanding the tax code is hard. There’s a reason why professional prep workers exist: they spend their time studying the intricacies of it so that you don’t have to. It’s their job to know exactly what you have to file, and to know what credits and deductions you may be eligible to receive. A lot of people focus on how working with a tax preparer can lead to a bigger refund because of the deductions and credits. But the real benefit is much more important than that: if you file incorrectly, you could find yourself owing the IRS or even prosecuted for tax fraud.
Professional Prep Workers Save You Money
Going somewhere like Liberty Tax for your filing isn’t free, but cutting them out of the process won’t yield a net gain. Liberty Tax services reveal a lot of deductions and credits that you might otherwise never have known existed. These deductions and credits often cover the cost of the prep work and then some. You could easily save hundreds or even thousands. If you end up owing, that’s money you don’t have to pay out of pocket. If you get a refund, that’s money right back to you. And without Liberty Tax services, there’s a good chance that you would have owed a lot more or received a lot less.
Want to see just how much Liberty Tax could have saved for you? Bring in your completed return and we’ll take a look at it. We can usually spot several missed deductions right off the bat, even if you’ve had your return prepared at another professional company.
Don’t risk trouble with the IRS, and don’t end up paying more than your minimum tax liability. Invest in good, professional tax preparation.
You live in North Carolina, but what if you work in South Carolina or dip across the border north to Virginia? Regardless of what states you visit or how often you visit them, if you earned more than a certain portion of your income while across state borders, you’ll need to pay tax to more than just North Carolina.
Keeping Track Of Earnings
Start by tracking what you really earn in a particular location. This is easiest if you’re paid per-job, but is possible regardless. If it’s under a certain threshold, you won’t need to report it at all. But if you don’t track it, it will be difficult to determine what’s going on.
Ask Your Company
If you are employed by a business that frequently asks you to travel between states, they may have some program in place to track hours for you and possibly even assist with current tax status. But if you don’t ask them, you’ll never know.
Work With A Prep Expert
People who owe taxes to more than one state are well advised to seek out experts to prepare their forms. Liberty Tax offices near state borders are accustomed to seeing this kind of situation. When people work in multiple states and are subject to taxes in these multiple states, it’s important to select a preparer that understands the intricacies of taxes in both states. That’s why it’s important to select a Liberty Tax franchise near a border, which has quite likely seen similar situations before.
Property Taxes Probably Aren’t Impacted
Remember, the main question about where to file your taxes is a question of income, not other charges like property taxes, etc. You will not usually owe property taxes of any kind to an area unless you actually own property there. Nonetheless it’s always a good idea to check with a tax expert before you file, just to make sure.
Thanks for checking out our tax blog. Check back soon for more!