As your business grows, it inherently gets more complex — and so do your small business bookkeeping and tax responsibilities come tax season. This begs the question: what exactly goes into ensuring your small business stays compliant with the appropriate bookkeeping and tax tasks throughout the year?
Do bookkeeping and taxes relate to one another? The short answer is “absolutely.” Below we’ll walk through what each is responsible for, but first, let’s outline where the overlap has its payoff:
- Uncovering potential deductions based on knowledge of all your expenses
- Making tax planning and tax filing easier by carrying over bookkeeping financial records into the forms you’ll need at tax time
- Receiving year-round support from your bookkeeping and tax team to keep you on track and up to date
What does a bookkeeper do?
If you’re questioning, “What does a bookkeeper do for a small business?” We’ll detail the answer here. Bookkeeping entails detailed record-keeping of your small business transactions. It helps assess your business’s financial vitality by tracking expenses and revenue. So, what services do bookkeepers provide? A standard bookkeeping service works with the following:
- Asset records
- Bank transactions
- Bills
- Credit card purchases
- Financial transaction reports
- Payroll records
- Purchase orders
- Receipts
- Sales invoices
What does a tax professional do?
Like a bookkeeper, many tax pros perform tasks that involve financial records. But, as the name implies, they focus on taxes and business tax preparation. Tax preparer responsibilities often include:
- Guiding clients through the tax return preparation process
- Collecting relevant financial records to produce an accurate tax return
- Making sure clients pay the right amount of local, state, and federal taxes
- Identifying small business tax deductions related to home office expenses, business travel expenses, and more.
- Filing small business tax forms
- Representing clients before local, state, and federal tax agencies as necessary
How a bookkeeper can assist with tax preparation
The bullet points above give you an idea about the benefits of a bookkeeper. The main takeaway is that when your bookkeeper is the same team as your tax preparer, they’ll have the full picture of your business’s financials. And, without accurate financial records, you won’t be able to complete your tax filing correctly.
Bookkeeping and tax services all in one
So, do bookkeepers do tax preparation? The answer varies depending on the person or professional service you choose. While you may want to do it alone, reality may set in. Do you really have the time and desire to accurately complete your small business taxes and bookkeeping tasks? Consider if it is worth the hours of your day to take on these tasks instead of hiring a tax preparer focusing on what you love about your business.