- Introduction
- What is tax accounting?
- Who is a tax accountant?
- The work of an accountant
- Responsibilities of an accountant
- Roles of an accountant
- Professional organization for an accountant
- How to charge for your professional accounting and tax services
Introduction
The professional accounting and tax services industry is changing drastically and dramatically. With innovation and technology rapidly changing the basics of how bookkeepers and accountants are fulfilling their duties to their clients. Nowadays we are seeing the cloud emerging and expanding in practices as well. We need to go back and look at how we have traditionally charged for our professional accounting and tax services as accountants.
What is tax accounting?
Comparing traditional accountants who always see to their clients’ all round financial statements and positions, tax accountants only focus solely on their client’s taxes. This type of accounting is known to be regulated by the Internal Revenue Code. Which will outlines particular tax laws that both individuals and businesses need to follow when they are filing their tax return documents. Tax accountants are there ensure that their clients abide according to the tax laws. They are also there to prevent them from accruing any penalties from the government.
Tax accountants will offer tax planning advice to their clients, and will help them to save money during their tax time. These professionals will create effective plans that their clients will be able to follow throughout the year, also keep them on track in order to meet their financial goals. They will equally protect them in order to avoid paying more than they will be able to afford by the tax deadline.
Who is a tax accountant?
Tax accountants will work with their clients to produce tax return documents that will follow tax laws and regulations. They will always keep their clients updated on their tax return information. As well as to work with them before tax time to draft a plan that will help them to reach their desired financial goals and outcomes. Tax accountants do often work longer peeiy during tax time, as they will make themselves fully accessible to their clients to make their tax process very easy for them.
The work of an accountant
Prepare tax documents
Tax accountants will determine tax strategies that will defer, minimize, or eliminate any tax payments, and equally arrange audits with the taxation authorities. These accountants are there to prepare tax documents for their clients that will include both public and private companies. Together with nonprofit organizations, government agencies, and private individuals. With the result of this broad customer base, tax accountant should be able to demonstrate ab excellent communication skills. As well as their ability to actively listen to their clients as they will express their own unique concerns.
Interpret the tax law
Together with preparing tax documents for their clients, tax accountants are there to interpret tax laws and explain the true implications of any recent changes in the law. After they must have prepared the tax documents, accountants will file tax returns on behalf of their clients. Then, they will prepare presentations and reports that will reflect their work. Professionals in this occupation should be able to understand a broad base of the business concepts and equally boast a accounting background.
In addition to them holding a bachelor’s or master’s degree, many candidates in the field do boast of certifications. This include certified financial planner, certified public accountant, and enrolled agent. These certifications will allow them to demonstrate a certain level of expertise in a specific area of the field. Generally, tax accountants do work standard full time hours in any office environment. However, during the tax season these accountants will be much busier. They will work extended hours and this include weekends and nights.
Review financial statement
Accountants equally review their clients’ financial statements to ensure accuracy, and help these clients to be able to meet the regulations and laws for taxes. They will calculate the taxes owed and prepare their tax returns, while equally making sure their clients’ taxes are fully paid on time. Accountants do work with their clients to be able to come up with ways they will reduce their spending. In order to enhance their income to improve profitability. In addition, they will help their clients to develop budget plans to be able to stay on track during the year in order to simplify things for them during tax time.
Work within their specialty
A tax accountant might decide to specialize within their field. For example, forensic accountants are known to investigate financial crimes such as bankruptcies, embezzlement and fraud. Tax accountants with a speciality in forensic accounting will use their expertise to investigate individuals who are suspected of tax fraud. They will rely on their extensive knowledge of tax laws to be able to conduct their investigations. And work side by side with some law enforcement professionals.
Reviews finances of their clients
Tax accountants with a management will focus review the finances of their clients and be able to prepare tax documents for business managers. These accountants work together with financial managers in order to focus on asset management. They will equally choose the best financial investments for their clients, and be able to explain the implications to their tax returns.
Work with the government
Government is another major focus of tax accountants, as they will work with tax records of local, state, and federal government agencies. These accountants will emphasize tax laws and regulations, and make sure that their clients aligns with all the relevant tax laws. Similar occupations like professional accounting tax services include the following
- Financial managers
- Budget analysts
- Financial analysts
- Cost estimators
- Personal financial advisors.
Understand software
Understanding professional accounting and tax services software is a major part of a tax accounting career. Accountants use different kinds of software programs depending on their clients’ particular needs. Accountants should be able to use Microsoft Excel to document their clients data and figures. Employers will often outline software requirements during the application process. Equally provide accountants the necessary training on many of the systems they will be using.
Responsibilities of an accountant
Examine financial statements
Tax accountants will work with clients to be able to get a clear picture of their all round financial situations as they will prepare their tax return documents. Accountants will review all important financial statements to be sure they are aligning with the tax laws and regulations. They will equally ensure that they maintain the most accurate view of a client’s financial situation.
Create budget plans
Tax accountants’ major responsibility is to help their client’s determine ways they will save money and stick to their budget. Accountants equally help clients to strategize ways to be able to increase their income and improve their profitability. This will include to notify them of how those changes will impact their tax return information.
Organize financial records
Tax accountants do not only work with their clients to prepare tax return documents. They also help their clients to organize their personal financial records. Tax accountants will keep their clients’ information on file and will access it anytime their clients have a particular request that will require a reference to prior documents.
Computing taxes
They will compute the taxes their clients are owing the Internal Revenue Service (IRS). As well as to prepare their tax returns, inform them of any refund or balance owed, and make sure they avoid incurring any penalties for missed deadlines.
Inspecting accounting systems
Successful tax accountants need to review their clients’ accounting systems to be sure that they are as efficient and effective as possible. Doing this will allow the accountant to be able to notice any issues or errors and correct them immediately.
Communicating with clients
Many individuals and business owners like to be involved with their tax return process. It is very important for clients to feel like they are understanding what to expect with their tax return. As well as the process it will take to complete their own information. Therefore, tax accountants need to be in constant communication with their clients and provide them with timely information.
Roles of an accountant
Usually, tax accountants work 40 hours per week in any office environment. However, during tax time their schedules might vary. Often tax accountants will meet their clients at a central location or better still travel to their business or home to discuss their tax return information. Additionally, during this tax time, they usually work extended hours and that include late nights and weekends. In order to accommodate the busy schedules of their clients as well.
The major industry for these professionals include the following:
- Accounting
- Tax preparation
- Bookkeeping
- Payroll services industry
Tax accountants might equally find employment in government agencies, finance and insurance, management or they are self-employment. Self-employed tax accountants might decide to work out of their own private office location, conduct their work out from their own home. They might decide to bring clients into their homes or offices to complete their tax returns. Probably travel wherever is most convenient for their clients.
Professional organization for an accountant
The Institute of Internal Auditors
This organization are known to focus on the auditing aspects of accountancy. It do boast of nearly 200,000 members around the world and will promotes training and development.
American Association of Finance and Accounting
The American Association of Finance and Accounting are well known to help accountants and finance experts see employment opportunities and chances for their professional development throughout the United States.
Young CPA Network
This organization are offering professionals the chance to fully develop their career skills together with interpersonal abilities in the accounting profession. The Network equally host conferences and provides networking opportunities.
Institute of Management Accountants
To be a member of IMA, you will be required to get the certified management accounting (CMA) certification. Members equally get access to job boards and career development plans. As well as annual conferences, networking opportunities, and continuing their education courses.
Professional Association of Small Business Accountants
One of the major accounting organizations in the world is the Professional Association of Small Business Accountants. This organization do provide her members access to national and regional meetings. Together with peer advisory groups, networking opportunities, and discounts as well.
How to charge for your professional accounting and tax services
Why? You should just simply put, the more efficient you are, the less time you will be spending on files. If you are to charge for the hours you will be spending, you will be needing to find new and better ways to justify your value to your clients. Let’s learn and understand the basics of billing and pricing.
Billing versus pricing
Billing is seen as the process or the act of putting a price on your service after you muat have completed it. While pricing, on the other hand, is known to focus on the value you are given to the client and it will be discussed in advance even before the work will be done. Billing is seen to often result in sticker shock, as your clients are presented with a bill after the very fact. They are literally held hostage to the time that you are to spend on the service, not on the actual outcome of your service. Pricing is the polar opposite of billing, trust me! As your client will know up front what they are expected to pay you for your services.
Billing models
Hourly billing
Many accountants are very familiar with this basic concept of billing. Hours that are worked are multiplied by an hourly rate to be able to determine a fee. Then, there are equally hourly billing attempts in order to recover the cost of your service plus an implied profit. Most times, there will be an inherent conflict with your client, they will want you to do things very quickly and cheaply as possible for them. While you will need the time to do something else.
Value billing
Here at teejaytrue, we have seen this commonly used in many accounting firms in these days. The hourly billing fee will be reviewed after the fact, to be able to determine the likelihood that your client will be very willing to pay the bill. Being an accountant, you will adjust the bill based on your very perception of what the client might consider reasonable. Write ups and write downs are the very language of value billing. Most accountants will overreact to the billing pain and often will negotiate discounts for their clients without even being asked.
Pricing models
Fixed fee pricing
This is based on the expected level of your work as well as your strong knowledge of the actual costs. The accountant will negotiate.a fixed price with the client up front. There will be risk here that we might even be underestiming your costs, thus losing margin. This will be mitigated by you including a regular review in our contracts with this client. Client relationships are more stronger when you are able to spend more time trying to understand their needs. Incidentally, client perception of value is just determined based on the peace of mind that you will be offering. Not just the time that you will spend on a given file.
Value pricing
This is known as the ultimate pricing model for maximizing your firm profits. Essentially, each client will be charged based the maximum that they are willing to pay for a service. The accountant will identify their client’s needs, try to assess their perception of value. Then be able to determine the price. Basically value pricing will yield the highest possible fees because you are just charging each of your client a unique price for the services that they will be receiving.
How should I charge?
You should prefer pricing over billing, simply because pricing will focus on communication and client perception of your value. In some known tax accountant stories and experience, pricing will build stronger client relationships. As you implement technology to be able to improve your internal efficiencies, you will need to revisit how you will charge for your services. Fixed fee pricing is very easy to implement, simply you creating a menu of services that you will be offering. As well as to create a custom fee for each of your client based on the mix of services that they will be needing.
While value pricing is much more profitable. It is equally very difficult to implement because you will need to become very comfortable in discussing pricing and needs with your clients. From those tax accountants we have read about, we find out that the firms have to implement a fixed fee pricing. That’s found about the implementation to be much more easier. Those that have known how to pursue value pricing find it very profitable but they have more work to do before a prospect will become a client.
However, it is still up to you to desire how to charge your clients. Take a good look at your services and determine which pricing model is the best for you.