The end of the year is a busy time for tax preparers and bookkeepers. Accountants must have all tax records for their clients gathered to file timely tax returns. Since tax laws constantly change, tax preparers must stay on top of changes throughout the year in order to be sure that tax forms will be correct by the time tax season comes around again. At the end of the year, this task becomes even more complex as accountants attempt to complete all tax records and return filings within a few weeks. When tax records and tax return filings are prepared correctly, business owners will have the peace-of-mind knowing that their taxes are properly taken care of, thus allowing them to focus on the other aspects of running/managing their business.
Bookkeepers Help Ensure Taxes Are Filed On-Time and Accurately
If taxes are prepared late or last minute, it doesn’t leave much time for accountants to process an accurate tax return. However, bookkeepers are responsible for accurate tracking and reporting throughout the year. A bookkeeper will have access to information about daily receipts, monthly invoices, mileage driven for business purposes, or even charitable donations made by clients during tax season. Bookkeepers who carefully track expenses throughout a fiscal year and stay up-to-date with tax-filing requirements will make sure the accounts have everything they need to file accurate taxes, keeping their clients’ finances secure.
How Involved Should A Business Owner Be In Their Tax Filing?
Some clients like to be directly involved with the end-of-year process. They prefer to speak to their tax preparer directly and frequently during this process. Others would rather remain hands-off and let their tax team (accountant and bookkeeper) handle all the responsibilities, only hearing from them when there are questions, points of clarification, or when a signature is needed. There is no right or wrong approach, it all depends on the client’s preference. However, what is important is to have comprehensive and accurate record-keeping, which is the responsibility of a bookkeeper.
A Tax Preparer Will Need Access to Hard Financials or Backups
At the end of the year, accountants will need back-ups and/or hard financials. These records will need to be complete and also easily accessible. Again, the responsibility for having these records hand falls on your bookkeeper. Bookkeepers throughout the year are creating and maintaining all the books in a business. They take care of things like keeping track of accounts payable, receivable, payrolls, budgets, taxes (both federal and state), as well as invoices from suppliers or other businesses. They also manage general accounting ledgers, record journal entries (transactions), and generate financial statements.
Data Must Be Concise and Comprehensive
The records provided to an accountant who is preparing taxes need to be concise so that they can work efficiently, yet at the same time, if they need to look deeper, the records and data should also be readily available for further research and investigation. In most cases, the documents logged by a bookkeeper throughout the year should be sufficient, but a bookkeeper should also keep and track all records, like monthly loan statements, credit card transaction records, as well as other detailed statements, in case a tax preparer needs more information.
A Bookkeeper Will Work In Harmony With A Tax Preparer
Your bookkeeper is the company’s liaison for tax preparers during tax preparation and filing. It’s essential that your bookkeeper and accountant have a strong working relationship. If your bookkeeper knows and understands how your accountant works, then both parties can work more efficiently and help ensure your tax filings are processed as smoothly as possible. A bookkeeper can work in harmony with your tax preparer on adjusted returns to make on-site books match tax returns.
Tax Planning and Preparation Starts At the Beginning of the Year
Tax preparers and bookkeepers may work more closely at the end of the year to file your business taxes on time, but their job really begins and lasts throughout the year. When you hire a bookkeeper, they will help ensure that all of your transactions are accurate and accounted for in detail. They will make sure your tax preparer has everything she/he needs to file your taxes on time.