Bookkeeping and Tax Preparation

Bookkeeping and Tax Preparation

When it comes to running a small business, there is one thing that can really give you a headache, cost you time, and may jeopardize your business – taxes. That’s why you need to make sure that you have a top tax preparer working for your business. However, not even the best tax preparer can do his job if your company’s books are not in the best shape. That’s why it is important to understand the importance of both bookkeeping and tax preparation.  MBA Financial & Accounting Solutions can help educate you on the difference between bookkeeping and tax preparation. For a FREE consultation, make sure to contact us at 800-576-5746 after your read this article.

What Is Bookkeeping?

Bookkeeping is an important financial service where a bookkeeper will handle the daily financial activities of your business. Some of the duties that a bookkeeper will handle include keeping track of daily transactions, sending out invoices, managing accounts receivables, handling the accounts payable ledger, keeping an eye on cash flow, and preparing the books for the accountant. 

The important work of a bookkeeper will make it easier for the tax preparer or the accounting to handle your business’s tax preparation. 

What Is Tax Preparation?

Tax preparation is the process of handling tax returns. For many businesses, tax preparation will be needed for handling various state and federal tax returns. In some cases, a small business will have to deal with local taxes. Since there are a number of rules and regulations that govern how taxes are filed, it is important to work with a tax preparer that understands every income tax return that is due for your company. 

Why is it so important that both bookkeeping and tax preparation work together?

The IRS and state revenue offices will carefully scrutinize your business’s tax returns. If there are a number of errors on a return, then your small business may be subject to an audit which can be time-consuming, intrusive, and perhaps costly. Therefore, it is important that you start with bookkeeping. 

There are a number of companies that will tend to fall behind on handling their bookkeeping. When that happens, then the tax preparer will be unable to do his job. This could lead to a major panic right before your business’s taxes need to be filed. 

Finally, poor bookkeeping can lead to one problem that could be nearly fatal to your business – an unexpected tax bill. The fact is, if your business hasn’t been keeping proper books, you may be blindsided with a tax bill that you won’t be able to pay. It’s almost like driving down the road blindfolded. This is why it is important that your business stays up to date on its books. 

Tips On Good Bookkeeping and Tax Preparation

Here’s a look at three easy tips that can help your small business when it comes to bookkeeping and tax preparation: 

1). Keep your books up to date 

First and foremost, you will want to make sure that your bookkeeping is always up to date. Today, you can hire a number of virtual bookkeeping companies that will be able to handle your books for a monthly fee or a flat fee. Some of the top bookkeepers include the following:

2). Make sure that your tax preparer has access to your bookkeeping 

Once you have your bookkeeping in place, you will want to make sure that your tax preparer has access to your most up-to-date bookkeeping. If you are working with a top bookkeeper, then you should have no problem giving the tax prepare the bookkeeping that he needs. 

3). Give your tax preparer enough time to meeting tax filing deadlines 

Finally, you will want to make sure that you hire your tax preparer long before your business’s tax filing deadlines. The last thing that you want to do is rush your tax preparer and potentially have to deal with late fees or an incomplete filing. 

Keeping Your Business In Top Shape With Bookkeeping and Tax Preparation 

Both bookkeeping and tax preparation are important to your business. However, you will not be able to get good tax preparation without goog bookkeeping. Be sure to have your books up to date and a quality bookkeeper before you hire your tax preparer. That one simple tip can go a long way to saving your business from a big headache. Let’s get you on board with a FREE consultation for your bookkeeping and tax needs.  Call MBA Financial & Accounting Solutions at 800-576-5746.