Guides
Part of Federal business tax obligations and filing basics
How to vet a federal business tax preparer's credentials and who signs your return
Use this to check a business tax preparer's credentials, who signs the return, what a good service refuses, and where a federal-only practice runs out.
No ranking of tax preparers survives contact with your own return. Someone great for a one-person consultancy may be wrong for a two-state partnership, and the reverse.
Judge a service by what you can verify: what the person holds, who signs, what they refuse to do, and how they behave when they do not know the answer.
What to take away
- Ask who will sign the return as paid preparer, then check that person's credential against the IRS directory rather than the firm's website.
- A preparer's value is in what they refuseto claim what you cannot support, to promise a refund before seeing your books, to skip a question because the answer is awkward.
- The rules on the return are the IRS's for the year you file. The preparer applies them; they do not set them, and neither does this page.
- You sign under penalty and you own the numbers. Choose someone whose questions annoy you slightly.
What the letters after the name mean
Four kinds of people prepare federal business returns for a fee. The IRS explains each on its page on preparer credentials and qualifications, including which of them may represent you if the IRS asks questions later and how far that right runs. Read it before assuming that the person who prepared the return can also defend it.
Overseen by
- Certified public accountant
- A state board of accountancy
- Enrolled agent
- The IRS, through its own examination and renewal
- Attorney
- A state bar
- Preparer with no credential
- Nobody beyond the identification number the IRS issues to paid preparers
Ask them
- Certified public accountant
- Is your license active in my state, and how much of your work is business returns rather than personal ones?
- Enrolled agent
- How many returns for my entity type did you sign last year?
- Attorney
- Do you prepare returns, or only advise on them?
- Preparer with no credential
- Who reviews your work, and who would speak for me if the IRS writes?
The credential tells you who can discipline the person. It does not tell you they are good at your kind of return. A CPA who audits hospitals and an enrolled agent who has done nothing but small-business returns for twenty years are both credentialed. Only one of them is the right fit here.
Representation follows the same split: CPAs, enrolled agents and attorneys may appear before the IRS in examinations, appeals and collections, while an unenrolled preparer may speak only for a return they signed, under Circular 230.
Who signs
A paid preparer signs the return and puts their identification number on it. That signature is the single most useful test of a service. The preparers the IRS warns about most loudly will not sign.
Will they sign the return?
Will the preparer sign your return?
They put a name on the paid-preparer line
Walk away, whatever it costs
They prepare the return, hand it back, and have you file it as though you did it yourself. If a service will not put a name on the paid-preparer line, walk away, whatever it costs.
Ask, in these words: who signs my return, and is that the same person I will talk to? In larger firms, the honest answer is often that a partner you never met signs and a junior does the work.
That is not wrong, but you should know it. You should also know who reviewed the junior's work before the partner signed.
What a good service refuses
The refusals are the product. A service worth paying will:
- Refuse to claim a deduction or credit you cannot document.
- Refuse to promise a refund figure before seeing your books.
- Refuse to skip a question because the answer is awkward, such as cash sales or a personal cost run through the business.
- Refuse to sign a return they did not prepare, and refuse to let someone else sign theirs.
What a good service refuses
- Declines undocumented expenses, even if certain
- Declines to quote refunds before seeing books
- Declines returns that mismatch filed elections
- Declines to backdate anything
- Sends you back for missing records
If you have never been told no by your preparer, you may not have a preparer. You may have a typist.
The interview
Run this before you hand over a single document.
Interview before handing over documents
- Ask which entity types they prepare most
- Ask who works, reviews, and signs
- Ask how the fee is calculated
- Ask what they need and by when
- Ask what happens if the IRS writes
- Which entity types do you prepare most, and how many like mine did you sign last year?
- Who does the work, who reviews it, and who signs?
- What is your fee based onhours, forms, or a flat rate? A fee that rises with the refund gives the preparer a reason to be aggressive with your numbers, and you are the one who signs them.
- What will you need from me, and by when? Their list should line up with the tax deadlines for your entity, not only the one everyone knows.
- When something is unclear, what do you doask me, look it up, or decide?
- If the IRS writes to me about this return, what happens, and what does it cost?
- Are you reachable in the months after filing, or only in the season?
Listen for specifics. "We handle everything" is not an answer to any of these.
Typical fees run from a few hundred dollars for a simple single-member LLC return to several thousand for a partnership or S corporation with payroll, inventory and multi-state apportionment. Most small business preparers quote per return or per form rather than per hour.
Ask what the quote covers: bookkeeping, state returns, amended returns, and answers after filing. The number itself says little about quality.
Where federal-only coverage runs out
A business return rarely stops at the federal level. Someone with a strong federal practice may know nothing about your state's franchise or gross-receipts obligations, and will not always volunteer that. Ask where their coverage ends; the state business tax side of the return is where gaps most often appear.
A good preparer will also ask how the business is classified for tax and want to see the proof, because entity tax treatment decides which return gets filed at all. If they do not ask, they are assuming.
Where to check
| Source | Use it for |
|---|---|
| IRS directory of federal tax return preparers | Whether the person holds the credential they claim, and whether it is current |
| Your state board of accountancy | A CPA's license status and any discipline on record |
| The IRS pages for your entity type and filing year | The rules the preparer is applying, so you can tell when they are not |
| Publication 334 and the instructions for your return | What the IRS expects of a small business return, in its own words |
The IRS covers the same ground from the other side in its guidance on choosing a tax professional, including what to do about a preparer who has already done something wrong.
Where to verify a preparer
Source
- IRS preparer directory
- Credential claimed and current
- State board of accountancy
- CPA license and discipline
- IRS entity-type pages
- Rules the preparer applies
- Publication 334
- What the IRS expects
What it confirms
- IRS preparer directory
- State board of accountancy
- IRS entity-type pages
- Publication 334
None of this replaces a licensed professional looking at your actual figures. It tells you how to pick one, and how to tell whether the one you picked is doing the job. The federal business tax overview covers what that job involves.
Common questions
Is a CPA always better than an enrolled agent?
No. They are licensed by different bodies for different scopes. For a business return, experience with your entity type and your state matters more than which letters follow the name.
The service is cheap and online. Is that a problem?
Not by itself. Price and format tell you little. Ask the same questions: what they refuse, and what happens if the IRS writes.
My preparer never asks me anything. Is that a good sign?
Usually the opposite. A return built from last year's numbers and a bank feed, with no questions, is a return nobody has thought about. Rules change from year to year, and a preparer who never asks is not checking what changed for you.
Who is responsible if the return is wrong?
You. The preparer may face consequences of their own, but the tax, the interest and any penalty land on the taxpayer who signed. Choose accordingly, and keep copies of everything you gave them, filed with the rest of your tax records.
