Tax preparation is probably the most critical part of bookkeeping and accounting as this specific task is directly related to certain federal or state laws. Hence, any error incurred while preparing or filing for one’s taxes, individual or corporate, could lead to unwanted audits from the Internal Revenue Service (IRS) or other government bureaus, as well as overwhelming penalties and fines. Worst case scenario, an individual or a corporation will need to face or undergo trials for criminal or civil cases such as tax evasion, tax avoidance, or tax fraud.
The good thing is, all the aforementioned consequences can be avoided by merely entrusting your taxes to licensed professionals who have been specifically trained to handle and manage taxes. Plus, though you do not need to learn the technicalities of tax-related processes, you need to be on top of this prior to handing over documents to the IRS. Be sure that you validate everything that is declared on the tax forms being filed on your behalf. After all, of all people, you should know best which are your current assets, liabilities, and equities.
Accounting Tax Prep: The Reason
Taxes are compulsory contributions mandated by the authorities; hence, tax preparation, tax filing, and tax payment are non-negotiable. Depending on the type of tax, there are standard percentages used to calculate how much tax you owe or are charged. For instance, the percentage of value-added tax (VAT) in the United States is at 10%, meaning when you buy your groceries, per se, and your total bill is $1,000, you basically paid for $100 tax.
The funds collated by the government, in the form of taxes, are used to support its projects and initiatives which are meant to benefit its people. So, you somehow personally reap the benefits of your taxes, or in some way, you help your less fortunate countrymen.
Accounting Tax Prep: The Process
Like how a bookkeeper or an accountant prepare for any other financial statements, there are also certain steps in filing or paying for your taxes.
First, of course, your tax accountants will need your data. If you have well-managed books or up-to-date financial statements, gathering data should be a piece of cake. The tax experts will then need to analyze which of those transactions are relevant or applicable for the current fiscal year.
While analyzing the data, the tax expert simultaneously itemizes and categorizes the transactions, separating assets from liabilities from equities. He/she then will tag which are taxable and non-taxable. Also, all possible tax deductions or any need for tax returns will be taken into consideration.
Tax Statement Preparation
Once everything is sorted out, it is time to prepare the tax statement – the final report reflecting the total amount of your tax liability. This is where you need to get involved as you have to verify if your tax accountant has properly and accurately declared everything.
After giving your approval, the tax expert fills-out all necessary tax forms as mandated by the Internal Revenue Service (IRS). You might as well want to verify all details first, such as your tax number and personal details, before signing the forms.
Submission and Payment
Then the last and final stage is to submit the completely filled-out tax forms and to settle the tax you owe. This step can be completed manually or electronically. Be sure to ask for the sealed or stamped copies of the forms to guarantee that everything was indeed filed accordingly.
Accounting Tax Prep: The People
Now that we have clearly established why you need to hand over the preparation and filing of your taxes to professionals or experts, the next thing you will need is to figure out whom to entrust your taxes with.
Whether for your personal taxes or your business’s taxes, you may opt to hire in-house, on-call, or virtual tax accountants.
Hiring in-house or on-call tax accountants could cost you more as they basically become your employees. Hence, you will need to provide everything they need to perform the job well – from the workspaces to the computers or laptops to the software or database systems. While it may be a good thing that you get to personally monitor their works and progress, it might eat up a chunk of your precious time. However, some favor this traditional method, as they say, they are more at ease that they personally know who handles or manages their taxes.
On the other hand, hiring virtual accountants is proven to be more cost-effective. These are the same professionals who have undergone training and certifications to perform tax-related jobs, it is just that, well-established firms like Bookkeeping Portland, OR hire them. This means that when you opt to outsource, firms like us save you from the trouble and hassle of hiring, screening, training, and monitoring these employees. You only need to make or agree with a deal, and we will take it from there. Of course, there will be collaborations and reporting as often as agreed, but you can rest assured that while you focus on more essential matters, we are working on the back-end completing and finalizing tax-related tasks ahead of the IRS deadline. We have enough skilled and competitive tax accountants at our disposal whenever a client needs them. Plus, the system and software we utilize are constantly upgraded to ensure all clients’ data are safely and securely stored.
Do not wait for the tax season before hiring your tax experts. It is best to prepare everything beforehand to avoid any miscalculations or misinterpretations. We, at Bookkeeping Portland, OR, cater to any or all bookkeeping and accounting needs – from invoices filing to bank reconciliation to financial reports generation to tax preparation. We are constantly innovating to ensure that our clients do not risk themselves or their companies to the possibility of messy audits, exhausting trials, and costly penalties. Give us a call now, so you can finally be at ease.