Tax accounting services can be broadly categorized into two: services that help you prepare your company’s statutory financial statements (known as pass-through entities, like sole proprietorships, partnerships, and limited liability companies) and services that help you prepare your company’s tax return. While both of these service categories are usually offered by the same accountants and auditors, their specific functions may vary from one company to another. This article will go over the differences between these two service categories in greater detail so you know which type of tax accounting service is right for you and your company.

What is a tax accounting service?

A tax accounting service is generally provided by a CPA or an accounting firm. While it is possible to hire a solo accountant to do your taxes, the costs can be prohibitively expensive. If your business is small enough that you can do your own taxes, we recommend considering this option. On the other hand, if you are a medium-size or larger company that needs or wants the help of an accountant or audit firm, a tax accounting service may be an ideal fit. A tax accounting service includes a wide range of services. At the most basic level, you can hire an accounting firm to prepare your taxes. This may include performing the calculations, making the assumptions, and filing the tax return. However, certain accounting firms offer a much broader range of services than just tax accounting. If you want to expand your firm’s financial reporting beyond tax accounting, one firm might be able to assist you. Similarly, you may have a specific need that a particular accounting firm can help you with. For example, one accounting firm specializes in helping S-Corps and LLCs with their accounting and financial reporting needs.

What is a tax return service?

A tax return service usually performs all of the accounting services and tax return services on behalf of its clients. As such, these services are usually provided by an accounting firm. You can find many different types of accounting firms that provide tax return services. Some are full-service firms that can handle all of your business needs and provide a wide range of accounting, audit, and tax services. Others are more limited in scope and can only provide tax return services, but they typically provide great accounting services along with the tax return services. It is important to note that many accounting firms provide both statutory financial statements and tax return services. This is particularly common in large accounting firms, as they may handle both types of work for many of their clients. On the other hand, smaller accounting firms usually provide purely tax return services. Be sure to understand what services your accounting firm provides before signing on with them.

Differences between statutory financial statements and tax returns

Statutory financial statements include you company’s balance sheet, income statement, and statement of cash flows. Tax return accounting covers the tax return and the tax consequences that may result from filing the tax return. However, many accounting firms include both types of financial statements in their services. When accounting firms offer both types of financial statements and tax return services, it can be difficult to know which financial statements to hire them for. Tax return accounting services help you compile your company’s tax return, filing instructions, and other tax return-related material. Once you receive the tax return, you will be able to file your return and pay any taxes that may result. Some accounting firms provide all of the tax return-related services required to file your tax return. Other accounting firms provide just the tax return-related services. If you want an accounting firm that can provide the full range of services required to file your tax return, you will have to decide if you want to hire an accounting firm that specializes in tax return services or an accounting firm that can also offer statutory financial statements.

Should you have a pass-through accounting service or a tax return accounting service?

The choice between a pass-through accounting service and a tax return accounting service comes down to your business needs. If you have a small company, you can probably perform your own statutory financial statements. With a small business, you can usually perform your own statutory financial statements, as long as you have adequate accounting knowledge and skills. If you have a medium-sized company or larger, you may need an in-house accounting team to help you manage your books and records. In this case, you should consider hiring an accounting firm that provides statutory financial statement services. It is also important to note that some accounting firms provide a combination of both types of services. This can be beneficial when the firm handles both types of work for a particular client.

Should you use an independent certified public accountant (ICPC) or an in-house accounting team?

This comes down to your company’s unique financial needs and circumstances. If you only need a basic accounting team to handle your financials, you may be able to get by with an in-house team. However, if you want to expand your firm’s financial reporting beyond tax accounting, you may need an accounting firm that specializes in providing statutory financial statements. If you are unsure about which type of service is right for you, we recommend that you hire an accounting team that provides both types of services. This way, you will be able to expand your firm’s financial reporting if you need to. It is also important to remember that the accounting team should be someone who can eventually replace you in the event that you decide to leave the business.

Why are statutory financial statements important to your business?

Statutory financial statements provide insight into your company’s performance and help investors evaluate the strength of your business. Statutory financial statements also help investors determine whether to buy your stock or avoid it altogether. As a result, investors and analysts rely heavily on statutory financial statements to make financial decisions. Statutory financial statements allow investors to evaluate your company’s performance by evaluating its assets and liabilities. The balance sheet shows the amount of money your company has on hand as well as the amount of its liabilities, like the amount due to the IRS.

Key Takeaway

Statutory financial statements provide key information about your company’s performance. These statements are important for investors to make financial decisions about your company’s stocks, bonds, and other securities. When choosing a tax accounting service, you want to make sure you hire an accounting firm that can provide both statutory financial statements and tax return services. You also want to make sure that your firm’s accounting team is someone who can eventually replace you.