By George Birrell, Head Tax Geek & Founder of Taxhub
This tax season a new option in tax prep is emerging. Virtual CPA platform technology is quickly becoming a popular choice for side-giggers, freelancers, small businesses, and rental property owners. The traditional mom-and-pop CPA shops and franchise tax prep shops can be costly and are inconvenient for these types of filers. Online and other tax prep software come without a personalized CPA experience.
When deciding what tax prep is the best option for small business owners, let’s first take a look at how complicated it can be.
For most taxpayers, there are usually two options. Most people try the do it yourself (DIY) route. They use online or store-bought software or an IRS download to do manually with a 1040 EZ. These come with hidden fees or offer a paid version for more complex returns and can be cumbersome and error-prone–not to mention the circular rigamarole of online software prompting pages you’ve already filled out. The other most common option is to pack up your tax documents and head to your local mom-and-pop CPA office or tax prep franchise such as H&R Block.
Navigating the tax filing maze
For those who are paid as independent contractors and receive a 1099 at end of the year, most don’t go beyond a SAAS online service or tax prep franchise, but could very well benefit from using a virtual CPA platform. For bigger businesses such as S or C corps and multiple-member LLC’s companies usually go the route of a full-service CPA firm. These options can be costly for all levels of filers, and in order to get a high-quality max refund with audit defense (and that face-to-face comfort of a CPA), virtual tax prep firms are providing the perfect solution as a middle-ground platform. Most filers will need professional help calculating rental properties, depreciation, and mitigating capital gains, not to mention small businesses that need a great bookkeeping system (often to be prepared by a CPA).
Don’t know if a CPA is needed? If you have foreign expatriate issues, complex stock transactions, or if you sold a house or rental property, a CPA is definitely recommended. When comparing costs, high-quality services run deep for more than half of filers, but filing with a CPA lowers tax bills an average of $438. However, brick-and-mortar shops like H&R Block and Liberty Tax can be costly, slow, and inconvenient.
Best tax recommendations for the exact platform filers need
Recommendations? Turbotax, Taxslayer, and online DIY businesses only work for a small percentage of filers, whereas a virtual CPA platform like Taxhub, Visor, or Taxfyle provides a great mix of value and high quality as well as provide for a max refund and audit defense. The new virtual CPA method of tax prep is a great way to develop a relationship with a CPA.
The virtual CPA platform, which gives personal access to a whole new class of taxpayers who couldn’t afford CPAs. Because the platform operates digitally, they save money on overhead and can provide high-quality services at a fraction of the cost. The virtual online CPA platform provides a traditional CPA firm with half the time and cost commitment, providing the perfect balance between tech and live interaction. The platform differs in that they don’t require customers to logon to their platform to communicate with their preparers–they can have a direct relationship, provided with a 77% or higher customer retention rate.
Filing before the pandemic and now
Virtual CPA platforms like Taxhub were online before the COVID-19 pandemic started so they already know how to operate properly virtually. While other businesses are struggling to pivot to more online services, they already know how to deliver quality care online. The platform’s core purpose is to level the playing field by giving small businesses access to the same tax expertise that has only been available for large corporate sustainability.
George Birrell, self-described “head Tax Geek and Founder” of Taxhub puts it this way, “Currently the market is at the beginning of a rapid shift in service offerings. In the past, there were two traditional methods of getting your taxes done: the DIY route or “bite the bullet” and go the face-to-face route at a mom-and-pop CPA shop or franchise. In just the last few years the big players, like Turbotax and H&R Block, now offer the online hybrid method that is the core of our business model at Taxhub.”
The virtual CPA platform model can cut costs and deliver CPA-level tax advice to a segment of the market that could previously not afford it. Many “solopreneur” clients have been paying a much higher marginal tax rate, but they don’t need to be.
Other startup competitors with the same business model raised large rounds thinking they would be able to scale like a traditional SAAS company, but they have stumbled hard, damaged their brand, and wasted a lot of advertising money. Scalability and value creation come naturally when certain fundamental structures and principles are first established in a virtual CPA platform–namely a sustainable customer acquisition stream and a quality supply-side stream of qualified tax prep providers.
This tax season, all side-giggers, rental owners, single or multi-member LLCs and partnerships, or corporations should consider all the options evenly while navigating the maze of online and in-person filing.