Is Hiring a Small Business Tax Service Worth It?

When you are considering hiring a business tax service, you think about the cost not just in dollars spent but in opportunity cost. "Opportunity cost" is an economic term used to describe the simple fact that every second you spend doing one thing you could be doing something else. In this case, as a small business owner, you could be operating your business if you were not spending time filing your taxes. The comparison, then, is not just a measure of spending zero dollars to do it yourself or spending $200 for someone else to do it for you.

When Will You File Your Taxes?

The first thing to consider is when you will actually find the time to file your taxes. If you are like most small business owners, you are already overbooked. Each minute of your week is budgeted to keeping your business running, and your weekends are time for yourself or your family. When will you choose to file your taxes if you have the choice?

What Else Could You be Doing?

If you choose to file your taxes during business hours, how much money will you be losing by not dedicating yourself to the business? For a sales-driven business, this could be quite significant. You will not be able to make calls, speak to clients, and carry out other daily tasks. If you are a lawyer, writer or graphic designer, these are not billable hours like usual. For example, if you are a graphic design company charging $50 per hour to clients, and it takes you 5 hours to complete your taxes, then you have lost the equivalent of $250 dollars. If you decide to do your taxes on your personal time, the cost analysis is more complicated. It can be difficult to quantify how much a walk in the park is worth, but you should think about it in these terms.

How Much Does the Accountant Cost?

You cannot carry out a cost analysis without looking at how much an accountant will cost. Some small firms may charge around $70 to $100 per hour to complete your taxes. While this sounds like a lot, most will be able to complete the process in just a few hours. It could cost less than $200 to have your taxes done by a professional. In the above example with the graphic design firm, it would be wiser to hire a service than to do it yourself.

How Much Will the Accountant Return to You?

One further point to consider when you are thinking about hiring an accountant is whether that accountant will return more money to you through finding deductions. You may know little about the process of getting deductions, and you will find more success with an accountant. To truly know the difference, you could do it yourself one year and hire an accountant the next. Or some people will want to try doing both in the same year. You can then compare how much you received in return with the accountant's success. This is incentive enough to hire an accountant in most cases.