For years, I did my own taxes. Especially when I had a job — you know, a full-time thing with benefits — and before I owned real estate, a business and had my two adorable deductions, doing taxes meant pouring a glass of Trader Joe’s three-buck chuck and spending 45 minutes collecting documents and filling out one or two sheets of paper.
Fast-forward to a more adult-like life, and things were a little more complicated, the business part especially. As a freelance writer, I didn’t know for sure what could or could not be claimed as a legit business expense. If I go for dinner with my friend, whom I know through work, can I write off my seared branzino? Or will that land me in federal prison?
Click to read more about how to file self-employment taxes.
About 12 years ago, I hired my mom’s friend, a certified public accountant (CPA) from my hometown in Illinois, and agreed to pay her about $800 per year to handle my taxes.
That seemed reasonable, even though each year I obediently stuffed hundreds of paper receipts into a big manila envelope in my desk drawer, and procrastinated and procrastinated and procrastinated until well into the spring. I hated sorting those little slips of paper into categories, tallying the sums and mailing the whole lot to Illinois. I spent so much bad mojo hating that task.
Meanwhile, my business grew and grew. Before I knew it, I was in the six-figures, and that amount kept doubling. A couple of years ago, my CPA retired, and I found a low-cost tax preparer in my neighborhood via a friend’s recommendation. Right away he alerted me to the fact that in the past 10 years since I’d incorporated my business, my previous preparer had failed to file a special small-business tax that only applies in New York City, where I live, and about two other towns.
The outstanding taxes, should I be caught in this benign omission, were about $60,000.
I about pooped my pants.
The tax preparer said that one option would be to continue to skip filing that tax, and hope the city never noticed it — but he was not willing to take that unethical route. Nor was I.
At the time, I was dating a film composer whose business structure was similar to mine, and I told him my woes. “You have to call my guy Harry on Long Island — I was audited one year for no reason and he took care of everything.”
I called Harry. Harry called his colleague, a tax attorney who knew of a totally ethical and fiscally wise way around my pickle: We filed a claim stating — honestly — that the error had been made, and requested that I pay what was legitimately owed for the past three years, which totaled about $15,000.
The plea with the city was easily accepted, I paid the owed taxes and started sleeping like a baby for the first time in months.
But my new CPA Harry went a step further. I upgraded my business (and life) by signing on with him for a larger engagement of about $3,500 per year. In exchange, his office fully takes care of all my bookkeeping — logging into my bank accounts and documenting all my expenses throughout the year. This, in addition to what seems to be very thorough and prompt quarterly and annual filings, means that I no longer feed my business and life with toxic energy resenting mundane paperwork that is best outsourced to the excellent offices of Harry the accountant. I also very much appreciate that Harry gets on the phone several times each tax season, and in his thick and loud Long Island accent, clearly explains all my filings and tax bills, and offers financial advice I consider wise and measured.
The best part about my new tax professional relationship is that I feel like every single penny spent with Harry is an investment — an investment in time, money, up-leveling my business and treating my entire personal and professional operations with the respect they deserve. I feel confident that I have a trusted colleague who has a vested interest in doing quality work for me, and that trickles into my whole business and life.
Click through to read more about why it’s worth it to hire an accountant for your taxes.