Many companies have learned from experience how important it is to separate their bookkeeping from their tax services. Unfortunately, most had to learn it the hard way– from the adverse outcomes that ensued when they used a single provider for both. However similar they seem on the surface, bookkeeping and tax services are two very different things. That’s why it’s better to use CPA firm services when you’re dealing with anything related to taxes.
Bookkeepers are often more interested in working directly with entrepreneurs, so their firms focus on helping them from a daily financial perspective. They design their bookkeeping services to help small business owners streamline their business practices. These systems cater to each client’s specific needs. After putting the systems in place, bookkeeping companies often teach their clients how to use it as a tool to make sound business decisions. Knowing the differences in the types of accounting professionals can help you get a view of your business from multiple views. Here are some of the reasons it’s wise to keep your bookkeeping separate from your taxes.
A Better Bookkeeping System
A company that specializes in bookkeeping tends to have more focus than ones that offer multiple services. When you work with a firm that does bookkeeping only, you’ll end up with a much better record keeping system than you’ll get with a firm that performs additional tasks.
Bookkeepers work with small businesses every day, meeting their needs with customized systems. However, while they rely on this experience to deliver the best services possible, the top firms are also aware that each client has very different needs. This helps them make any changes that are necessary for filling these varying needs. Clients often gain valuable insights from working with bookkeepers, but that doesn’t mean they’re good at doing taxes.
CPA Firm Services Focus on Taxes
Typically, CPAs take on bookkeeping clients as a way to obtain new tax clients. CPAs usually have internal bookkeeping departments, so they probably won’t be doing the work themselves. Just as importantly, a CPA’s standard rates are much higher than a bookkeepers. And you certainly don’t need to pay these higher rates for standard bookkeeping.
Additionally, most CPAs don’t have QuickBooks certification, and some just don’t like using it in the first place. QuickBooks is great software for business owners that don’t really understand accounting. CPAs definitely understand accounting, but they don’t necessarily know how to use QuickBooks. You might think it’s better to have your taxes and bookkeeping done by a single provider, but separating them offers a lot more value. Bookkeeping firms often get new clients who don’t want to use CPA firm services for their daily finances because they’ve had a negative experience doing so in the past.
Two Very Different Perspectives
Another reason you should consider separating your taxes and bookkeeping is that your business will receive information from two different perspectives. Not all accountants view things in the same way. A detail-oriented bookkeeper is like having a personal financial watchdog on staff.
A good bookkeeper will have a deep understanding of your company’s operations. That means they’re in a better position to monitor your regular transactions than someone that only updates your bookkeeping system once a year. Come tax time a good bookkeeper will be able to give your CPA clean books and discuss your operation’s intelligently. With two different professionals at your disposal, you’ll have two perspectives on your finances and be equipped to make better decisions.
The Importance of Having a CPA in Place
It’s recommended that all businesses have a CPA in place to help with their taxes. When a reputable bookkeeper meets with a prospective new client, asking if they have a CPA should always be at the top of their list. If they do, that’s great. But if they don’t, it’s very important to track one down as soon as they can. There are many reasons to use CPA firm services, and it’s clear that every business needs them from time to time. Truly unique transactions arise all the time when you’re handling a client’s bookkeeping, but having an experienced CPA on hand to answer specific questions is also quite valuable.
Business owners should have a CPA with a thorough understanding of both their financial life and the state of their business. In fact, tax planning is critical to individuals and businesses both, so it’s essential to consider your entire tax picture when hiring a CPA.
There is a great deal of value in separating your tax needs from your bookkeeping. The most significant reason for this is specialization. Let your CPA firm services and your bookkeeper handle what they do best. Your CPA should focus on high-level tax matters, but a bookkeeper is better suited to managing your daily transactions.
About Ivan Popov
Ivan has been counting for the past eight years for small and medium sized businesses helping owners with tax planning, financial covenants, financing and tax optimization.
Email: [email protected]
License ID: MA-32053