In this article, our core subject is professional accounting and tax services taking into account their importance, roles, responsibilities, and key differences between them.
Accountants working for firms are determined to ensure precise financial records, maintain profit and loss records of the organization, and compare the actual cost of the business versus budgeting costs. This all helps the company’s management to make informed decisions.
It is the accountant’s will to specialize in any area, such as health care benefits, employee compensation, tax preparation, and data processing. Choosing a tax professional will not be a hustle once you finish reading this article.
Are Professional Accounting and Tax Services Offered by a Tax Professional the Same as an Accountant?
We will discuss professional accounting and taxation services, so let us take this reading further and understand the concepts in detail.
Pro Accounting
To check if both the profession is same or if there are any major differences, let us shed some light on the job of an accountant and tax professional. In general, accountants are responsible for handling the company’s accounting. They also analyze where your firm stands in competition, work on the accounting budget, and track whether the company achieves preset goals.
Accountants’ tasks and responsibilities include day-to-day bookkeeping by tracking the company’s financial transactions and organizing them as required. Additionally, some accountants work on weekly, monthly, quarterly, and annual reports. An accountant manages major works such as balance sheets for small businesses, income statements, and cash flow statements.
Tax Professional
On the other hand, tax professionals’ work is mainly based on tax planning and tax management. Tax professional bridges the gap between the organization and tax authorities and helps companies in reducing their tax liabilities. Since tax professional has a hegemony on tax codes, using them, their taxation services include advising individuals and firms on ways of managing their financial assets. This ultimately results in tax breaks.
Taxation services for business clients include advice on tax incentives for capital expenditure, employee benefit funding, and energy conservation. Whereas, considering individual clients, it consists of a health savings account, A 529 plan for a child’s education, and a retirement account.
Tax professionals’ roles and responsibilities include tax planning at the end of the fiscal year, compensating executive shareholders, representing the company before tax authorities, and managing tax audits by tax authorities. Besides this, tax professionals include working on tax planning while building and setting up a business and filing corporate income tax.
In a nutshell, both professional accounting and tax services are different regarding their basic work. However, they have their importance and are extremely important for business firms.
CPA VS Tax Preparer
| Area | CPA | Tax Preparer |
| Definition | An accountant who has passed the state board’s test and has the necessary training and experience to practice in their state | A person without a license who, in exchange for payment, prepares and submits clients’ income tax returns |
| Licensing Authority | US State Board of Accountancy | – |
| Roles and Responsibilities |
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| Continuing Education | Usually, it is 40 hours per year | A tax preparer must take 18 hours per year |
What is the Eligibility of Professional Accounting Software for Accountants?
Professional Accounting and Tax Services require accounting software to improve a company’s operational efficiency by standardizing and automating financial management activities like invoicing and reconciliation.
Accounting software has complexity and functionality, with many solutions tailored to businesses of a certain size. An accounting software’s functionality can range from payroll processing and invoicing through reconciliation and bill and expenditure management to financial reporting, depending on the product’s scope. Project accounting for businesses providing professional services and fund accounting for charities are two examples of industry-specific capabilities offered by various accounting platforms:
- QuickBooks Online
- QuickBooks Payroll
- FreeAgent
- Firm360
- Gusto
- Patriot Payroll
- Tax Dome
A product must meet all the following requirements to be considered for inclusion in the accounting category (pro accounting and tax services):
- Keep an organization’s accounting records in order.
- Provide tools for managing invoices and payments automatically.
- Process payments and purchase orders automatically by automating accounts payable processes.
- Journal entries should be made available so that users may adjust their financial records.
- Keep tabs on money coming in and going out so you can calculate your company’s products and services’ profitability.
- Oversee money, banks, and various forms of payment (check, credit, ACH, etc.).
- Help users complete the accounting period’s financial close.
- Deliver regular reports like balance sheets and KPI dashboards.
Tax Management Vs. Tax Planning
There is a difference between tax management and tax planning, despite their similar roots. Tax planning has immense importance when looking for legitimate tax breaks. Contrarily, tax management focuses on minimizing annual tax liabilities. You proactively try to reduce your taxable income and tax liability rather than reacting to an unexpected tax bill. While both are crucial, different abilities and understanding are needed for each. A significant distinction between tax planning and management needs to be grasped if you want to bring your tax situation under control.
| Tax Management | Tax Planning |
| 1. It ensures compliance with laws while reducing tax liabilities | 1. This accounts for tax breaks and results in reducing tax liability |
| 2. Pave the way for effective decision-making | 2. Better decision making |
| 3. Tax management considers everything from the past to the future | 3. Tax Planning works on paving the way to enjoy benefits in the future |
| 4. It maintains accounts in prescribed forms, tax filing, and tax payments | 4. Comparing the alternatives to a single solution and then applying the best solution |
| 5. It is important to adhere to the condition resulting in fruitful decision-making | 5. To reap the tax benefits requires tax planning |
Financial planning includes taking care of your taxes, which you should do all year long, not just when it is time to file your taxes. You may save both time and money through proactive tax management. Considering every difference, professional accounting and tax services are a must for any organization to flourish in this competitive world.
You Should know this Before Choosing a Tax Professional
Professional accounting or tax services personnel certified with a Preparer Tax Identification Number from the IRS can prepare federal tax returns. Tax professionals have various strata of knowledge, training, and experience among tax professionals.
One key distinction between legal professionals is their “representation rights.” For more information about each type of certification or license, read on!
Unlimited Representation Rights:
There is an unlimited right to an enrolled agent, CPA, or attorney to represent before the IRS. Certified tax specialists may advocate on their customers’ behalf in all audits, payments, collection proceedings, and appeals.
- Enrolled Agents – Certified as legal by the Internal Revenue Service. There is a suitability check for registered agents. They must pass a three-part Special Enrollment Examination that requires proficiency in federal tax planning, business, individual tax filing, and representation to tax authorities. Besides this, completing 72 hours of continuing education every three years is a must for the tax professional.
- Certified Public Accountants – Certified by the State Board of Accountancy in one or more U.S. Territorial Boards. CPAs are required to complete the Uniform Certified Public Accountant Examination. They must graduate from an accredited accounting program and have to fulfill the experience and character standards set out by their state’s regulating body for the accounting profession. To keep their CPA licenses active, CPAs must also meet certain ethical and ongoing education criteria. Some CPAs focus solely on tax preparation and planning, while others provide a wider variety of services.
- Attorneys – State courts, the District of Columbia, or their designees (often the state bar) must issue a license. They must typically graduate from law school and clear the bar exam. In most jurisdictions, attorneys must maintain a certain level of continuing education and ethical standards. Some lawyers focus solely on tax law, while others offer various services.
Limited Representation Rights:
Some preparers who lack one of the certifications are restricted in their ability to work. In front of revenue agents, customer service representatives, and similar IRS workers, including the Taxpayer Advocate Service, may only represent clients whose returns they prepared and signed. In addition to being unable to represent clients, they are also barred from raising appeals and handling collection matters. Those providing professional accounting and tax services but have no authority to represent clients include:
- Annual Filing Season Program Participants – With the help of this voluntary program, CPAs, Attorneys, or Enrolled Agents are recognized. It was meant to promote learning and being ready for tax season. For tax return preparers who meet the IRS’s requirements for annual continuing education, the IRS awards a Record of Completion for the Annual Filing Season Programme.
- Returns submitted after December 31, 2015, are restricted to Annual Filing Season Programme participants.
- PTIN Holders – Preparing tax returns is illegal for anybody with an active preparer tax identification number but lacks professional credentials and does not participate in the Annual Filing Season Programme.
Professional accounting and tax services professionals must have a PTIN issued by the IRS to complete their tax return for payment legally. Ensure your preparer includes one in your tax return with IRS. (They need not have it on the duplicate they provide you.)
You should use caution when selecting a tax return preparer, as even those not appearing in the directory may give competent service. Always find out how much education and experience they have in professional accounting and tax services.
Professional Accounting and Tax Services help small companies and sole proprietorships in accounting and taxes during the time of filing returns. If you are looking for the same, contact our experts at Toll-Free Number (800) 580-5375.