Accounting and tax services may all seem the same, but they’re not. Find out what the differences are and how you can be sure you’re working with the right kind of pro.
There’s no need to make costly mistakes when it comes to your taxes and finances. In this post, we’ll give you all the info you need to know to pick the best accountant for you and your business.
What Are Accounting and Tax Services?
Accounting services and tax services seem the same at first glance, but there are important differences that you need to know about as a small business owner.
Tax accounting is different from other types of accounting. It’s main focus is the preparation of tax returns and tax payments. Tax accountants are mostly interested in only a few areas of your finances: income, deductions, donations, and certain gains/losses.
Unlike some forms of accounting that is specific to daily business operations, tax accounting is for everyone from individuals who make a small income to giant corporations with millions (even billions) in revenue.
How Are Tax Services Different From Bookkeeping and Financial Accounting?
In the accounting world, titles can quickly get confusing. At first glance, one would assume that all accountants do basically the same thing: crunch numbers and keep up with money.
However, upon closer inspection, you find that is not the case. Every CPA is not a tax preparer, every tax preparer is not a CPA, and not every bookkeeper prepares taxes. Let’s define some of the various roles a little better.
– Tax Accountant
As Investopedia puts it, “While accounting encompasses all financial transactions to some degree, tax accounting focuses solely on those transactions that affect an entity’s tax burden, and how those items relate to proper tax calculation and tax document preparation.”
Tax accountants don’t just file taxes in April. They work all year long helping with quarterly tax payments, payroll taxes, and other related tasks.
Unlike other types of accounting, tax accountants are regulated directly by the Internal Revenue Service (IRS) since filing taxes requires the use of very specific forms and follows very strict laws.
– Bookkeeper
Bookkeepers, on the other hand, are the kind of accountant that all types of businesses and nonprofits use on an almost daily basis. Their role is to do exactly what their title implies. They keep up with the books (financial ledgers) of the organization they serve. They accurately record financial transactions such as who owes you money, who you owe, company spending and account balances, etc.
– CPA
A CPA (Certified Public Accountant) is a degreed accountant who has completed years of specialized study in courses governed by the Association of International Certified Professional Accountants (AICPA) and has passed rigorous exams. They also are required to enroll in several hours of Continuing Education (CE) courses each year. CPAs are certified at the state level, so there are slight variations depending on which state a CPA operates in.
CPAs are able to do tax preparation and bookkeeping, but their services extend far beyond that. In our firm, for instance, we provide
- tax services,
- monthly bookkeeping,
- payroll & HR support,
- financial audit & compliance services,
- and CFO consulting
Common Accounting And Tax Solutions
Let’s take a closer look at what all is involved with some of the more common accounting and tax solutions you’re likely to need in order to run your business well.
- Accounting Services – Basic bookkeeping and accounting services include managing accounts receivable, accounts payable, bank reconciliation, preparation of financial statements and other reports
- Financial Records – As we wrote about in a post on “3 Types of Financial Statements Your Business Needs”, the basic financial records that an accountant can help you put together are a monthly income statement (or Profit & Loss Statement), monthly balance sheet, and a cash flow report.
- Tax Services – Thanks to ever-changing tax laws, filing your own return can be a real headache…not to mention time-consuming. Thankfully, tax prep pros can help make it easier. It’s their job to stay current on the law and file your returns in an accurate and timely manner. Tax services fall into two basic categories:
- Tax Preparation – Before you can file your taxes, there’s a process of putting the right forms together, making sure they’re filled out accurately, and getting your return ready to sign. This usually is a once-a-year event.
(For further reading, check out a post we did on “How a Good CPA Makes Your Small Business Tax Preparation Easier”.) - Tax Planning – Throughout the year, a tax pro can help you maximize deductions, reduce your tax bill through strategic retirement investments or donations, and keep better records.
(By the way, farmers can benefit from tax planning and preparation too. Read about “How Your CPA Can Provide Helpful and Valuable Farm Tax Advice This Year.”)
- Tax Preparation – Before you can file your taxes, there’s a process of putting the right forms together, making sure they’re filled out accurately, and getting your return ready to sign. This usually is a once-a-year event.
- Bookkeeping Services – Get accurate and up-to-date information on your financial position with the help of a good bookkeeper.
- Business Consultant – Because money is such an essential part of your business, a CPA often serves as a good business consultant who can help you be more efficient, manage your money better, and invest in growth opportunities.
How to Find the Best Accounting And Tax Services
So, the big question on your mind now is “how do I find the best accounting and tax services?” Here are 5 things we think you should do when finding an accounting professional to team up with.
1. List Several Accountants In Your Area
While there are many accounting firms that are able to operate remotely thanks to modern technology (ours included), it’s best to work with someone nearby so you can actually sit down face-to-face when you need to.
Being able to actually see our customers in person is one of the reasons we’ve set up 6 offices all across West Tennessee. (We’re in Jackson, Dyersburg, Paris, Milan, Martin, and Brownsville – near the new Blue Oval City.)
Ask friends, family, and other business owners who they recommend. Make a list of 3 or 4 that you’re familiar with and begin to check them out.
2. Check Their Credentials
One of the best ways to know if an accountant is qualified to handle your finances is to check their credentials.
Some of the things to look for are whether or not the person is a:
- CPA (Certified Public Accountant)
- CFA (Certified Financial Analyst)
- EA (Enrolled Agent)
- Tax attorney with a PTIN
3. Learn About Their Experience
Where did they get their education and training? How long have the been in business? How many clients do they serve? What areas of expertise do they have?
More questions are always better, and they shouldn’t shy away from any of them.
4. Look For Good Reviews
Thanks to online reviews, it isn’t difficult to find out what people are saying about any company. Accountants are no exception. Google their name and see what others think. Check social media. Talk to fellow small business owners who have dealt with them.
5. E-file
Another great thing about living in the Age of the Internet is the ability to file taxes electronically. Be sure that the CPA or tax accountant you’re talking to has the ability to let you e-file your returns. The process is so much smoother and faster.
You can read more in a post we did titled “5 Ways to Find the Amazing Small Business Tax Accountant Your Business Needs.
Accounting and Tax Solutions You Can Count On
You deserve to expect more from your CPA. That is at the core of what we believe at CRS CPAs, and we’ve got 40 years’ worth of experience and tons of satisfied customers to back it up. We love helping small business owners, farmers, and nonprofits be successful. So if you want dependable help with your finances and taxes, schedule a call today to find out if our accounting and tax solutions are what you’ve been looking for.
