Before understanding precisely why you need a good tax accountant Hunters Creek, FL, it is imperative that you understand the basic concepts of tax accounting per se, especially when you are setting up your very own business. Let us take a look at why and how taxation accounting is integral to the smooth running of just about any business.
- What is ‘Tax Accounting?’
Tax accounting, by and large consists of myriad different accounting methods that tend to focus on taxation related issues rather than in the setting up of public financial statements. Tax accounting at least in the US, is essentially governed by the ‘Internal Revenue Code.’ This code specifically dictates the myriad different rules and regulation that just about all companies, firms and sole proprietors, needs must follow. This holds especially true when they are preparing any and all of their taxation related returns for the purpose of paying their required taxes. However, it is pertinent to note that tax principles more often than not, tend to differ from the generally accepted accounting principles.
- What are ‘Tax Returns’?
A tax return may be referred to as the tax form or even forms that are also used to report income and subsequently file all the required taxes, so accrued with the relevant tax authorities such as the IRS of Internal Revenue Service in the United States of America.
The core purpose of filing these tax returns is to essentially allow the taxpayers to be able to calculate their overall tax liability and subsequently remit both payments and/or request refunds, as the case may be. By and large, most tax returns should be filed just about every year for any and all individuals or business that are able to receive (or have actually received) any and all incomes during the year, irrespective of the source of the income. This can include earnings accrued through interest, wages, capital gains, dividends, or any other profits that have been accrued though a legitimate commercial enterprise or activity.
Note: Illegal activities due to their very nature are not included in the tax net. However, anyone not involved in a legitimate business yet seemingly having a high income will almost certainly be looked at with suspicion by the tax authorities, who would be all too eager to figure out the source of his accrued earnings.
On the other hand, not paying taxes on legit commercial enterprises also carries a very high price tag since the tax authorities will sooner or later figure out that a person is not a tax payer. This is a criminal offence and it is known as ‘tax evasion’ in the United states and this crime carries both stiff fines as well as long imprisonment terms, as punishment.
However, there is no need to be apprehensive if you live near Hunters Creek or Kissimmee in Florida since there are many a really good tax accountant Hunters Creek, FL, who will be on hand to advise you as and when required.
- Tax Accounting: A break down
The core purpose of all accounting is to track the funds that are associated with any individual business. For this purpose, there are a set number of well-known principles on which the world of accounting is based. These principles are as follows:
- Generally established accounting principles
All Financial accounting (irrespective of the fact that it is either cost accounting or tax accounting or a basic book keeping) essentially utilizes a series of already well established accounting principles. In the case of tax based accounting, the specific selection of many if not most of these accounting principles, is based on their ability of providing an accurate picture to the tax authorities without ‘any window’ dressing. The core principles to be used will depend entirely on both the regulatory as well as the reporting requirements that the company, firm or sole proprietorship will have to face with the help of a good tax accountant Hunters Creek, FL.
For example, for all public companies that have been duly incorporated in the United States of America, most such businesses entities are mandatorily required to execute all of their financial accounting (including taxation based accounting) both in accordance with and also as per GAAP or Generally Accepted Accounting Principles.
As a matter of fact, just about all international public limited companies are liable to report their financial statements in accordance to the International Financial Reporting Standards or IFRS for both consistency as well as ease in the collection of taxation information. The main reason due to which all of these near universally accepted accounting principles have been created is that it also actively helps provide near continuous information to not just the regulators and the taxation and collection related authorities, but also the business entity’s myriad different investors and creditors and also their regulators as well.
The above principles are utilized though certain statements and as a matter of fact, it would not be wrong to state that the universal core of all accounting depends on the ‘Financial statements’. The more important ones are the following:
- Balance sheet
- Income statement
- Cashflow analysis
- Balance sheet
All assets, (both fixed and liquid) liabilities (payables) and capital (or equity as it is more popularly known) accounts are essentially reported on the balance sheet itself. The balance sheet in effect, basically utilizes the core financial accounting principles so as to be able to report the total (net and gross) worth of the commercial enterprise as well as the prognosis with reference to future economic growth of the business organization.
- Income statement
All revenues (profits) and expenses are both shown and also reported on the income statement of the business entity. The main purpose of showing them here is to ensure that the overall financial accounting of the business concern will be able to result in the final determination of the actual net (as opposed to gross or profit before deduction of taxes) income present in the ‘total’ column of the income statement. But should the business entity be running at a net loss then the it will be marked in brackets, or alternatively with a – sign next to it.
- The Statement of Cash Flows
The statement of cash flows or cash flow statement is prepared so as to effectively explain any changes that may be taking place in the business entity’s cash funds (or even cash equivalent funds such as cashable securities.) The statement is prepared for the duration of the overall time period that is particularly mentioned right in the heading of the cash flow statement.
However, tax accounting is slightly different from conventional accounting that may be used to inform the managers as well as the owners and investors of the company, the actual financial position of the business concern. Your friendly neighborhood tax accountant Hunters Creek, FL will be able to teach you the ‘tools of the trade’ so to speak and thereby prevent you from making a mistake and so stop you from inadvertently incurring a loss.
Balance sheet items for instance. can easily be accounted for quite differently by the tax accountant Hunters Creek, FL when he is helping you prepare the financial statements as well as the mandatory tax payables. For example, a company can prepare its financial statements by implementing the age old first-in-first-out or FIFO method so as to record their inventory for taking stock of their ‘goods available for sale’ for financial information purposes. But they are not bound to do so since they can also implement the last-in-first-out or LIFO approach purely for tax collection basis, as such. The core benefit of using the latter procedure on the end of the financial period is that it significantly reduces the financial period’s current taxes payable.
Generally speaking, accounting at the holistic level easily encompasses just about all of the financial transactions that may occur during a fiscal year (or any other pre-determined financial period for that matter) to a certain extent, but as your tax accountant Hunters Creek, FL, will inform you, tax accounting basically focuses on only those transactions that are able to specifically affect an entity’s entire tax burden. So as to be able to understand precisely how any and all of these items are able to correlate tax document preparation, which in turn will lead to proper tax calculation.
While the tax accountant Hunters Creek, FL will do his utmost to provide you as much relief as may be possible under the law, it is important to understand that tax accounting is very tightly regulated indeed and also regulated by the Internal Revenue Service or the IRS, i.e. the nation foremost tax collection agency, to ensure that all the relevant and associated tax laws are quite strictly adhered to by the tax accountant Hunters Creek, FL . Apart from that these regulations also apply to many other accounting professional and even those individual taxpayers, whose tax related issues can also be easily handled by tax accountant Hunters Creek, FL.
It is important to understand that the IRS also has certain requirements when it comes to tax collection purposes. These include the overall use of specific documents and even forms so that the tax payer can properly submit all due and relevant tax information, as mandated by the law. Here, again the tax accountant Hunters Creek, FL will be able to help and guide you all the way through the process.
Apart from that, there are certain other reasons due to which you may well be required to seek the advice and professional opinion of a tax accountant Hunters Creek, FL.
Of course, the reasons below are not complete and it will almost certainly take you a certain amount of time before you are able to identify precisely what it is that you want a tax accountant Hunters Creek, FL to do for you. Here are some of the more common reasons because of which you might believe that you also need a tax accountant Hunters Creek, FL.
- Preparing your own taxes can be an onerous task indeed, not to mention that it is also stressful, time-consuming, and furthermore can be downright confusing at times
- Mistakes are not an option and that is why one should always make sure one’s tax returns are completely accurate
- The overall tax situation is pretty complex due to certain changes because there may have been certain changes that could have occurred in the current fiscal year. This is why you may need highly specialized advice and workable tips from your tax accountant
- You want some detailed tax planning advice for your future plans
- You are facing a really tough IRS
- You may have to file back taxes
- You need to pay off a tax debt
- You have recently started a business
- You have invested in the stock market and it has paid rich dividends thus attracting the attention of the tax authorities
- You have purchased rental property
In light of the above, we can easily see that the tax accountant Hunters Creek, FL. is of seminal importance in ensuring that all of your due taxes are paid properly and there is no chance that you may be booked for tax evasion, should you have inadvertently filed your documents incorrectly.
Furthermore, such a tax accountant will also help ensure that any legal benefits that you can lawfully derive from the rebates and exemption schemes will also be availed and therefore you will not end up making a loss, in any way. All of this is only possible should you hire the services of a tax accountant Hunters Creek, FL.