Accurate accounting is how you reduce errors on your tax returns. This may sound obvious, but the amount of tax you wind up paying—or not paying—depends more on accurate numbers than how well tax law is applied. And if you’re simply turning your books over to a CPA firm to prepare your tax returns, you’re running the risk of inadvertent errors that can come back to haunt you.
How CPA firms approach accounting.
When you take the books to a CPA firm, they more than likely won’t question the information you’ve provided unless there are obvious errors or inconsistencies. They may rely on what you’ve given them in good faith without asking for verification.
A CPA’s skill set and value lie in their area of expertise— tax preparation, not bookkeeping. Not every CPA is a tax preparer and not every tax preparer is a CPA. In general, bookkeepers are experts in managing day-to-day finances like payroll and expenses. CPAs specialize more in taxes and strategic planning.
Why it’s important to work with an accounting firm before you do taxes.
Whether you’re a small business, a mid-size organization, or a self-employed individual, a good accountant or accounting firm will take the time to understand you, your business, and your unique financial situation.
A professional accountant will have a strong understanding of the tax implications that are associated with your business’s financial activity. They will also consider all your financial goals and provide personal attention to minimize tax liabilities and avoid a potential IRS audit.
Additionally, accountants are up to date on the latest tax laws and regulations, helping you optimize your filing for maximum savings.
Working closely with an accounting firm or an accountant is designed to bring you the following:
- Accurate accounting, financial reporting, tax estimates, and timely filing
- Answers to any and all financial questions, including tax preparation
- In-depth knowledge of your accounting and business operations
One of the biggest advantages of working with an accountant or accounting firm is that they will have all the financial information your tax preparer needs ready in advance. If you are not there yet, use this checklist to ensure your CPA is set up for success.