Introduction
What is tax accounting?
Reasons why your business needs tax accounting services
How to keep with accounting industry trends in tax season
Introduction
This article tax accounting services, will show us how to keep up with accounting industry trends in the tax season for the coming year 2021. While everyone were be busy celebrating, accountants and CPAs will be waiting with bated breath for the tax season to start. A new tax season actually means to embrace changes, new tax laws, and stay up to date with the industry trends.
Now, you might be wondering, how will knowing about this new trends influence your work and performance as a tax accountant? Well, with the number of new tax laws that have come into action this very year, despite the global pandemic. Together with the changing infrastructure of the small companies as well as the bigger corporations. Failure to stay up to date with this very tax laws certainly mean falling behind for your own tax firm.
What is tax accounting?
Tax accounting is a structure of accounting methods that’s centered on taxes instead of the appearance of public financial statements. It is governed by the Internal Revenue Code, which often dictate the particular rules that individuals and businesses must follow when they prepare their tax returns.
This tax accounting is regarded as the means of accounting for purpose of tax. It all applies to everyone, businesses, corporations, individuals and other entities. Even those that have been exempted from paying taxes all participate in tax accounting. Its purpose is to ensure that all funds are tracked. As well as funds that’s going out which is associated with individuals and entities.
Tax principles vs. GAAP
In U.S, there are two sets of principles that are always used when it comes to issue of accounting. This should be noted, they are different and should never be confused. The first principle you should know is tax accounting principles and the second principle is financial accounting. This financial accounting is also known as generally accepted accounting principles (GAAP).
Under this GAAP, companies will follow a particular set of accounting principles, standards. As well as procedures when they are compiling their financial statements by taking note of all financial transactions. Balance sheet items will be accounted differently when they prepare financial statements and tax payables. For instance, companies might prepare their financial statements and implement the first in first out (FIFO) method. To ensure they record their inventory for financial purposes, yet they will make sure they implement the last in first out (LIFO) approach for tax purposes. This latter procedure will reduce the current year’s taxes payable.
While accounting often encompasses all financial transactions to some point. Tax accounting focus is solely on those transactions that will affect an business tax burden. How those items will relate to their proper tax calculation and tax document preparation. However tax accounting is regulated by a body known as Internal Revenue Service (IRS). This is to ensure that all associated tax laws are adhered to by tax accounting professional and individual taxpayers. The IRS equally require the use of particular documents and forms as required by law.
Professional tax accountant
To hire a professional tax accountant is not compulsory for an individual, but it’s often necessary for a corporation. Because business taxes are far gmore complicated than personal taxes.
Tax accounting services for an individual
For an individual taxpayer, tax accounting is centered solely on items like their income, qualifying deductions together with their investment gains or losses. As well as other transactions that will affect the individual’s tax burden, that’s why the individual need tax accounting services. This will limit the amount of information that is neede for the individual to manage his/her annual tax return. And while a tax accountant wil be used by an individual, but know that it is not a legal requirement.
Meanwhile, general accounting will involve the tracking of all funds that’s comes in and out of the individual possession. Not minding the purpose, and this include personal expenses that doesn’t have any tax implications.
Tax accounting services for a business
From a business angle, more information will be analyzed as part of the tax accounting process. While the company’s incoming funds, will be tracked just as it is done for an individual. There is equally an additional level of complexity relating to any outgoing funds that will be directed to some business obligations. This will include funds that is directed towards particular business expenses as well as funds directed for the shareholders.
While it is equally not a must that a business should use a tax accountant to perform these duties. It is fairly common in bigger companies because of the complexity of the records involved.
Tax accounting services for a tax-exempt organization
Even where an organization is tax-exempt, tax accounting services are necessary. This is due to the fact that many organizations are needed to file their annual returns. They will provide information relating to any incoming funds, like grants or donations. As well as how the funds were used during the organization’s operation. This will help to ensure that the organization is adhering to all laws and regulations that governs the proper operation of a tax-exempt entity.
Examples of tax accounting services
Financial statements
The accounting firm will assist you in preparing your financial statements in line with professional standards. But express no opinion or any other kind of assurance on the underlying information that will be included in them. The financial statements produced might be a useful tool for management to make financial decisions.
Audit services
Your accounting firm should be able to see their role in your financial reporting process. As a way to be able to provide constructive solutions to maximize the profits of your company. Remember that audits differ from reviews and compilations. These audits are an intensive examination of your business records that will provide more level of assurance.
Bookkeeping
Meaningful and well organized financial records will show that your company operations are done more efficiently on a daily basis. That’s the foundation of a successful business, which shows that your business is doing well.
Audits, reviews and compilations
Your accounting firm should be able to view their role in your financial reporting process as an opportunity. For them to be able to provide more constructive solutions in maximizing your company’s profits and efficiency. They will provide financial reporting on all three levels of assurance:
- Audit: This means an intensive examination with the highest level of assurance
- Review: An analytical procedure that will be conducted with limited assurance
- Compilation: This will be based upon the information you will provide and used primarily for your internal use.
Cash flow and budget analysis
Your business can be profitable and still run into trouble due to some cash flow issues. The firm should be able to forecast and evaluate your company’s financial condition. Estimating some financing requirements, that will track your cash flow sources and uses.
Compilations
The accounting firm you hired should be able to know their role in the financial reporting process. This will be an opportunity to be able to provide more constructive solutions to maximize your company’s profitability and efficiency. Understand that compilations differ from reviews and audits as they will based upon the information you will provide.
Financial forecasts and projections
Forecasting is very necessary when you are trying to effectively manage and make your business to earn more profits. From a very simple projection to a more complex financial modeling. A CPA tax advisor is there to assist you in achieving your company’s financial goals.
Reasons why your business needs tax accounting services
To find the best business structure
You should understand that accounting is not all about you counting money as people always think. It is much more bigger than that. With a CPA tax advisor, you will be much able to find the best structure for your business. Examples of business structures include the following corporations, partnerships, and LLC.
Financial analysis
For your business to be successful, you need financial analysis because it is very important. Then to be able to have a successful business plan, accounting is very crucial.
Advice on software to use
Your business need accounting software in one way or another. Trust me! Without the help of a tax accountant or an accounting firm to handle your tax accounting services with the software. If not, you might end up buying a fake software. That is why you will need accounts that will help you with your accounting journey.
Tracking expenses
Tax accounting services are needed to be able to track all your business expenses. During the transactions of your business, you will have to spend and equally earn. Without proper records, you will end up confusing yourself with transactions. That said, accounting is very crucial.
Provide tax accounting services
Every business need tax accounting services to be able to calculate and prepare tax returns. Therefore, you will need an accounting firm or a tax accountant to help you with your company’s tax needs.
Because tax accounting services are very important to every business. They are many outsourcing firms that can handle it at a very high level. Many businesses have adopted a method to hire a professional accounting firm to help with their accounting.
How to keep with the accounting industry trends in tax season
There is a massive cultural shift that has been increased by the new tax laws. The inclusion of state of the art communication technology in different industries, and the increasing need to comply with these new tax regulations.
According to Sage’s report that more than 90% of US accountants feel that the cultural shift in their workspace. It is highly due to the heavy dependent on technology during the accounting process. As an outsider, you will find it very difficult to follow accounting related news or even find the right resources. Let us consider some few easy steps for all CEOs, CFOs, tax accountants. As well as accounting firms to remain on top of the latest tax and accounting trends for the upcoming tax season. This will enable them to know how to offer tax accounting services very well to their clients.
Following a dedicated tax accounting services journal/publication
You need to keep abreast with the new trends demands much more than just reading the daily news or to glance through mobile notification updates. There is need for you to understand that it has become relevant for all tax accountants to keep a close eye on the news. As well as publications, and get updates from trustworthy resources across the country.
For instance, The CPA Journal and the Journal of Accountancy are there to act as your steady source of trend updates. In the tax, accounting, and auditing field. So go out there and get one for yourself. You might equally get a fresh slice of the FASB news, GASB, and IASB updates. All these are simplified and made very precise by the editors of The CPA Journal. We here at Teejaytrue advice that you subscribe to their daily newsletter to learn about the small changes. That is making a big impact on the way you are perceiving the tax and accounting industry.
Install and check tax and accounting app
When your competitors are busy adopting the latest technology, you should never stay behind either. Do not ever shy away from installing at least one good accounting news related app on that your phone. You will be able to find a number of authentic and unbiased applications in the PlayStore. That will be acting as your window to the world of new tax and accounting trends.
The best of these apps have different menu options for trends and insights. Since many of these apps are very much free for Android and iOS phones, you will try them and equally learn about ways to be able to protect your company data. As well as methods to ensure that you integrate cloud computing to your existing desktop based accounting software. And the very best consumer relationship management (CRM) software platforms.
These apps are aimed at bridging the gap between professional tax and accounting services. Together with the current range of technologies that the accountants are using to serve their clients much better. In this coming tax season, it might even become very tricky to cater for them to cater for their client’s needs. Without the help of an integrated app that will give you needed access to your own accounting cloud solutions.
Look For an integrated cloud accounting platform
You will find CPA firm or a CPA tax advisor that will use cloud based accounting solution that will provide the whole deal. By the whole deal we actually mean current news on tax reforms, updates on the lastest trends. As well as information on your clients’ professional tax and accounting need daily. Along with particular services for order management, financial data management, big data and content management. Together with the integration and distribution of the accounting functions.
The integration of AI to sort through your very accounting data might be optional. As long as the cloud computing platform will manage the current bulk of financial data that’s flowing in. In addition, your all in one cloud accounting software should be able to provide remote login for your authorized employees.
Cloud hosted accounting software will help your firm to keep all invoice, expenses, cash flow, and sales information in a specific place. Currently CPA firms are transforming themselves speedily with the help of cloud based accounting services. The introduction of cloud computing into the fields of tax, accounting, and audits have helped professionals. To be able to push their boundaries and equally redefine the services they are known to provide to different clients from different industries.
Follow wealth blogs and subscribe to their podcasts
For some light and casual reading, you might want to follow blogs that publish news and updates on the different trends that govern the fields of tax and accounting. However, blogs like Teejaytrue do share number of great information on tax accounting services and wealth generally. Since they do not have as any strict and any editing verification procedure as the well recognized journals. We advised that you should be very careful about the stats and numbers you will pick up from any blog piece.
You might devide to follow some blogs of recognized accountancy schools and organizations to receive accurate information every time no matter your location. Subscribe to their podcasts and channels that will exclusively cater for your consumption. There, you will find correct information relayed in an easily understandable formats for all professionals across United States.
Teejaytrue few last words
To follow the correct trends might mean that you are gaining access to information that will save you during this upcoming tax season. You may even find a new tax firm that is much better capable to handle your company accounts. To remain updated with the current changes in tax laws, technologies in accounting, and the changing needs of the industries. Your tax accounting services firm will be catering to can be quite challenging. The trends currently have shifted to:
- Automated accounting
- Outsourcing accounting functions
- Focus on data analytics
- Blockchain technology
- Cloud based accounting
- AI based accounting
- Tax prediction and remote tax accounting services.