Accounting Tax and Financial Services
Accounting tax and financial services provide various types of services to businesses. These include bookkeeping, payroll, tax preparation, and financial planning.
Generally accepted accounting principles (GAAP) are used to prepare financial statements and tax returns. However, tax accounting is a separate set of standards that differs from GAAP. This requires a higher degree of expertise for both business owners and professional accountants.
Bookkeeping
A bookkeeper is the person responsible for recording daily financial transactions and maintaining a general ledger. This involves posting debits and credits, producing invoices, and reconciling bank statements.
Business owners need to understand the basics of bookkeeping in order to ensure that their finances are up-to-date and accurate. This helps them make strategic decisions and improve cash flow.
There are two major systems used in bookkeeping: single-entry and double-entry. The latter is based on the principle of debits and credits, where each transaction is recorded twice.
Once the transactions are entered into the general ledger, they’re reviewed and analyzed by an accountant. This is done to make sure that each account has a debit and credit balance and that no accounts are overly high or underly low.
Payroll
Payroll is the process of calculating and distributing employee wages, taxes, and other benefits. It can involve multiple components and is an expensive and time-consuming task.
A business may use payroll software to manage this function. It may also outsource the entire payroll process or use a cloud-based solution.
Accounting tax and financial services professionals provide advice to clients on payroll and other aspects of tax and financial planning. They often have access to real-time data, and can offer shortcuts and strategies for making smarter business decisions.
Companies must also record payments to employees, including bonuses and overtime pay, as well as the amount they pay for Medicare, Social Security, and unemployment taxes. These are recorded in a payroll journal. The journal entries may take the form of initial recordings, accrued wages, or manual payments.
Tax Preparation
Tax preparers complete tax return documents for individuals, families and businesses. They need to be knowledgeable about tax laws and requirements, understand how to apply deductions and credits and have the math skills required to fill out forms accurately.
Tax preparation services vary in cost and level of service, and some offer more complex or high-level options than others. Our research found the best tax preparation companies offer a variety of services, have reasonable pricing and a high reputation for customer satisfaction.
H&R Block offers a combination of multiple tax prep locations and an easy-to-use refund advance loan that makes it our top pick. Jackson Hewitt is the other major player in the market, offering in-person and online tax prep.
Financial Planning
Financial planning is a process of defining and setting goals. It involves analyzing your timeframe, cash flow, risk tolerance, current insurance coverage, tax strategies and investment goals.
A comprehensive and highly customized plan can help individuals keep their financial house in order, reduce stress and save more money for their long-term needs and dreams. A solid financial plan can also help them avoid unexpected risks, such as a major illness or untimely death.
Adding financial planning services to your accounting practice can be a great way to maintain and increase client relationships. In addition, offering these services can help you earn more revenue per client.
Changing demographics are driving the demand for personal financial planners. Baby Boomers are aging, and their wealth is being transferred to younger generations. Many of these clients need help with tax-effective retirement planning. This is especially true if they own business interests or other assets that are subject to income taxes.
