Introduction
In many ways, accounting and taxation services are those services provided by an accounting firm or a CPA for the growth of your business. This accounting firm will handle your business financial, accounting and taxation services needs so you will have time to focus on growing your business. They will provide you with their team of accounting experts to guide and support your business operations. Through the preparation and filing of your company tax declarations as well as to maintain your company accounts together with the provision of treasury services.
We will study the different types of accounting and taxation services that can provided for your business:
Income tax return
Bookkeeping
Payroll processing
Financial reporting and analysis
Income tax return
An income tax return is a form that’s filed with a tax authority that will report income, expenses, and other important tax information. This tax returns will allow you to calculate your tax liability, schedule tax payments, and even request refunds for the overpayment of taxes. In United States, tax returns are filed for an individual or business with reportable income, that include wages, interest, dividends, capital gains, or any other profits.
That’s where a tax accountant comes into picture and there are many benefits to work with a CPA or accounting firm. That many people find out that it worth the cost. While anyone can easily file their taxes on their own or use another tax preparation solution. But as the saying goes, just because you can do a thing doesn’t mean you should.
Some of the reasons why your business needs to hire a CPA to prepare your taxes as part their accounting and taxation services.
Licensing
Practicing CPAs are expected to have a license through their state. To be able to maintain this license, they must be doing this two things: (1) to complete a specific number of continuing education hours. (2) be able to run his or her business according to the standards. These standards will provide assurance to you and for your business that you’re getting a quality service.
Consistency and stability
A CPA will be there for you and your business year after year, providing accounting and taxation services. Practicing CPAs are always in it for the long run.
Their doors are always open
A CPA will perform different kinds of financial services, not just taxes. Therefore, their doors are always open for your tax questions, tax planning, and for any audit help you will need. When other tax preparation services close their doors on you from May to December. Who will help you when you will get that audit letter? Certainly your CPA will!
Record retention
Part of the job of a CPA is to maintain your tax information just like a doctor will hold on their patient’s medical records. Your CPA tax advisor acts as your own personal filing cabinet over the years. You’ll be able to get your own copy of the tax return and other supporting documents. In a nice little folder for you in order to file away yourself if you need. You should also understand that digital formats are equally becoming more prevalent.
Tax Planning
The best part of you having a CPA is the tax planning advice he or she will offer throughout the year. There are some year end tax moves you might make that will be able to save you hundreds in tax dollars. Software and tax preparation companies won’t be there to help you with those things.
Professionalism
As mentioned before, a CPA is licensed with the state. They’ve passed through so much accounting classes, a tough exam. They must keep maintaining their education credits each year. It clearly shows that is only a person who wants to be professional is willing to pass through what it takes to be a CPA.
Your time
The last good reason we will give you is your time. We here at Teejaytrue are not going to lie and say that you won’t have to spend a little bit of your time to prepare your tax files to take to a CPA. But understand that these professionals will save you the time it will take you to enter in all the information and file your tax return. Each year, the process equally gets quicker as you will learn exactly what you are expected to bring to your CPA.
Bookkeeping
Bookkeeping is the procedure that involves all the processes ensuring that your business has an accurate record of its financial activity.
Traditionally, bookkeeping is physically recording your business’s day to day transactions in a book, that was what brought about the name bookkeeping. However, as technology is advancing and many businesses are now employing the use of spreadsheets. As well as tax accounting software, the process has developed massively. Therefore, bookkeeping is a process that involves a variety of tasks ranging from basic data entry into a software platform to working with a tax preparer.
What Is involved in bookkeeping
With this view in mind, let’s look at some of the general processes that are basically involved in bookkeeping for any business.
First, you need to coordinate with your tax specialist. It doesn’t matter if you are the one handling your business bookkeeping or you want to work with a professional. Part of the process will certainly be tax-related. You’ll need to be able to identify potential deductions for your business. That’s why you need to work with your tax specialist to make your tax procedures very easy.
Setting up and streamlining accounting software
One of the very first tasks involved in bookkeeping for any business is to set up and manage your bookkeeping or accounting software. And that why you need an accounting firm or a bookkeeper, who might be a CPA. This means that you will connect your business bank accounts, any necessary data entry, and reconciling transactions. Although some of the tasks might be automated within the software. Part of bookkeeping will involve checking for errors and to ensure that everything is running smoothly and is completed correctly.
Choosing an entry system
Another major part of business bookkeeping is to determine your entry system, meaning whether you’ll use a single or double-entry accounting.
Single-entry accounting actually means that you’ll be recording all your transactions once, either as an expense or income. This method is very simple and straightforward, suitable specially for smaller businesses that don’t have significant inventory or any equipment involved in their finances.
Double-entry accounting means that every of your transaction will be entered twice, in order to balance the books. Each transaction, therefore, will be entered as both a debit and a credit. Although, double-entry accounting is more complicated, and extremely useful and will to prevent errors in recording transactions.
Choosing an accounting method
Similarly, you’ll equally need to decide whether you’ll use cash or accrual-based accounting.
Cash-based accounting means that you’ll only be recording transactions in your system when money changes hands. This actually means you won’t record invoices that your customers owe you or any outstanding bills you owe. Until the customer pays you and you pay your own bills.
With accrual-based accounting, you’ll be recording those invoices and bills even when the funds haven’t been exchanged. Generally, accrual-based is the type that is the recommended method, but just like your entry method, the decision is up to you. And once again, the method you decide to use will certainly affect how you will perform your bookkeeping tasks. And equally how you will manage your finances.
Managing transactions
After you must have made these decisions regarding your software, entry system, and your accounting method. Your business bookkeeping will be largely involve in managing your transactions on a daily basis.
Handling accounts receivable and payable
In addition to the overall process of managing transactions, bookkeeping for business tends to encompass all the tasks involved in both accounts receivable and accounts payable. For accounts receivable, this will mean to estimate the eventual value of a finished project. As well as to prepare and send invoices, and to provide statements. Essentially, you will ensure that your business is paid for your goods or services.
Payroll processing
Payroll processing is known as the administration of employee pay based on employee type, status, salary, wages and deductions. It equally involves to fill reports and pay employment taxes. These calculations need to be done on time to be able to follow the company’s pay schedule, and in compliance together with the applicable regulations.
Payroll processing might be complex to manage because of its many differing factors, like:
- Pay scales
- Employee classifications
- Promotions
- Terminations.
It’s important to have these checkpoints in place at the critical points of the payroll processing to be able to avoid error as possible.
Let’s look at some things that an accountant or accounting firm must do to ensure that the calculations are accurate.
Start with clean data
There are common mistakes like employee misclassifications which might happen during onboarding. Which will impact your employees’ health insurance and retirement benefits, and tax withholdings. Do add a checkpoint here to be able to confirm the employee classification is very correct. It is very necessary for your employee to confirm their personal information and tax code to ensure that there are accurate before their first payroll run.
Verify timesheet information
For your company timesheets, you need to have a system in place that will be checking for inconsistencies with employee type, hours worked and pay scale. A preventative measure here is that it will reduce the risk of overspend on payroll. All these are the reasons why you need a CPA will do while providing accounting and taxation services to your business.
Know your total payroll costs
You must know how much each employee will be costing the business beyond their wages to be able to spot inconsistencies during each pay period. Always bring in gross wages, benefits, tax and National Insurance withholdings for each employee.
Produce and distribute payslips
You will need to give each employee and worker a payslip detailing their:
- Gross pay
- Deductions
- Net pay
- Hours they worked for that pay period.
Payslips should equally include your employee’s National Insurance number and tax code, their pay rate, and their pay and deductions year to date. It is possible to make the payslips using your payroll software if it actually has this very feature. You will be able to use different software if it does not. You might either print payslips or send them electronically to them.
Completing the annual reports and tasks that will be prepared for the next tax year
You will need to report on the previous tax year and then prepare for the new tax year. That’s where your a tax accountant to handle this for you. Your annual report will include the employees’ pay, payroll benefits and deductions. In order to prepare for the next tax year you will be needing to update the employee payroll records from the last day of the tax year.
Be sure to keep up with all payroll legislation and compliance
To stay on top of the payroll legislation and laws wll be challenging because they keep changing. Real time Information, the cycle to work scheme together with the gender gap are instances of how social influences will impact payroll legislation.
Simplify payroll tasks with technology
To manage so many moving parts of the payroll is a lot to juggle. There are many software solutions that are using automation, smart data and connectivity. That will save you time on manually uploading the payroll data. This will help you to generate more reports quickly, reduce errors and maintain compliance too. A modern payroll software solution will simplify your payroll operations, so you will need to focus on strategic ways you will help the business to grow.
Thought
Your payroll system should be able to help you stay ahead of changes and equally accommodate rapid expansion. Ask yourself, will this business be able to cope with hiring extra employees? Or, will the extra admin be a burden?Technological developments and the influential role cloud computing is currently playing have so much accelerated the evolution of business processes. Cloud-based payroll systems will provide real-time reporting together with frequent updates to be able to cover the latest changes. As demand keep increasing for businesses to be able to perform complex, labour-intensive tasks, automation will offer a way to save time and increase overall efficiency.
Financial reporting and analysis
Financial reporting is a type of reporting that refers to standard practices that will give the stakeholders an accurate depiction of the company’s finances. This include their expenses, revenues, profits, capital, and cash flow, as formal records will provide deep insights into financial information.
Benefits of financial reporting
Improved debt management
As you know, debt might cripple the progress of any company, no matter the sector. While there might be many types of financial reporting concerning purpose or software. Almost all solutions will assist you to track your current assets divided by the current liabilities on your balance to help you gauge your liquidity and equally manage your debts accordingly.
Trend identification
Regardless of the area of the financial activity you will look to track, all kind of reporting that will help you identify trends. Both past and present, which will then empower you to be able to tackle any potential weaknesses while still helping you make the type of improvements that will benefit the health of your business.
Real time tracking
Gaining access to centralized, real time insights, you will be well equipped to make accurate, informed decisions swiftly. Thereby, trying to avoid any potential roadblocks while you maintain your financial fluidity at all times.
Liabilities
To manage your liabilities is an important part of your company’s financial health. Business loans, credit lines, credit cards, and credit extended from vendors are all liabilities to manage. That’s why you need a CPA tax advisor to help you out while providing accounting and taxation services.
Importance of financial reporting
Tax
Tax is the biggest reason for the importance of financial statement analysis, basically, you need to use it! The government will utilize such reports to ensure that you always pay your fair share of tax.
For other companies, investors, shareholders, etc.
If you’re considering to invest your money in a company, it will only make sense that you know how well that company is doing.
Here is where the importance of financial statements come into play for investors. This will equally apply to credit vendors and banks who are considering to lend money to a company.
For internal decision making
From what have been discussed, financial reports are not really the best tools for making all internal business decisions. However, they might serve as the ‘bedrock’ for other reports like management reports. They will and might be used to make decisions.
For improved internal vision
Financial analysis and reporting are known to be accurate, cohesive, and widely accessible way to share critical financial information throughout your company. When your financial insights or data is said to be fragmented, things will quickly fall apart. In a nutshell, this alone will answer the question, ‘what is financial reporting and analysis?’
Financial analysis and reporting will help to answer a host of important questions on every aspects of your company’s financial activities.
To raise capital and performing audits
Financial reporting and analysis are used to assist companies, regardless of the industry, to raise capital both domestically. As well as overseas in a very planned way, it’s an important component of the ongoing commercial success in today’s competitive digital world.
3 common types of financial reporting
Income Statement: This report will tell you how much money your company made or lost in a given time period, basically a fiscal year.
Balance sheet: This piece of financial reporting software will provide a snapshot of your assets and liabilities that’s debt at a given moment in time.
Cash flow statement: This report will show how much money flowed into and out of your business during a period of time. The cash flow statement is important for things such as making sure you have enough money to make payroll.