This is the final article (click here for Tip #1 and Tip #2 and Tip #3) written by my husband Pete Lachance, CPA, who will provide some tips and tricks to help home party plan consultants reduce their taxes and make their life easier when filing their home party business taxes.
Tax Software vs. Tax Professional
Dreading completing the taxes for your home party business? There are two options to get your taxes done: do it yourself using Tax Software or hire a Tax Professional.
Tax Software
If your home party business is small and moderately profitable I recommend the use of tax software to complete your taxes. Tax software, such as TurboTax, is now amazingly simply to use even for complex tax situations. But the real question is will the tax software help you reduce your taxes. Based on the returns I’ve seen produced from various tax software products I would say it does an excellent job for people with small home party businesses.
If you decide to use tax software I highly recommend TurboTax Home & Business. This software costs about $70. Compared to the cost of hiring a tax professional, using tax software is a no brainer for most small home party businesses looking to save money.
Tax Professional
If your home party business is complex, very profitable and will pay a significant amount of tax I highly recommend hiring a tax professional. Although a tax professional will cost more compared to using tax software, they will pay for themselves by finding ways to reduce your taxes. A tax professional preparing an individual return with a home business will likely charge at least a few hundred dollars depending on your tax complexity and if a state tax return is also required.
How to pick a tax professional? Ask your friends or relatives for referrals. Also look for someone with the Certified Public Accountant or the Enrolled Agent designation. Both of these professionals must pass a stringent exam and maintain their tax knowledge by taking continuing education. I do not recommend using someone who does taxes on the side and does not do taxes as their full time job. The tax code is extremely complex and it takes someone with significant education and experience to properly prepare a tax return and minimize taxes paid.
