Denver, Colorado
Seeking Better Accounting in Denver Colorado?
QBO should be your first stop in Denver when looking for accounting services.
Do you need your business or personal tax returns filed with professional bookkeeping in Denver? Call Wendy! She will be able to get you set up with an online portal to send and receive documents securely.
QBO takes the tax burden off the business owner, ensuring all engaged tax services are prepared and filed in a thorough and timely manner. QBO’s experienced tax professionals are very familiar with the many federal and state tax codes. With the combination of our CPA’s knowledge and our tax software, QBO provides accurate and compliant filings with secure file sharing and documentation.
Need more than tax services in Denver for your business? QBO has the skills and expertise to allow you to outsource your ENTIRE accounting department to us. Bookkeeping, bill pay, payroll, invoicing, and sometimes just sorting through paperwork. QBO provides a one-stop-shop that takes care of all the back-office headaches you don’t have time to deal with.
What is Tax Accounting?
Tax accounting is a collection of accounting techniques that focuses on taxes rather than the public presentation of financial results. The Internal Revenue Code governs tax accounting and lays the specific procedures that corporations and individuals must know and follow when completing their tax returns.
- Tax accounting is a branch of accounting concerned with preparing tax returns and payments.
- Individuals, enterprises, corporations, and other entities employ tax accounting.
- Individual tax accounting focuses on income, eligible deductions, charitable contributions, and investment profits or losses.
- Tax accounting is more complicated for a firm, requiring additional examination of how funds are spent and what is or isn’t taxable.
- Hiring a professional tax accountant is not required for an individual but is frequently necessary for a corporation because business taxes are more complicated than personal taxes.
- Tax laws evolve, and regulations change – accounting professionals shield against inaccuracies and possible penalties from the IRS. Working with accountants means your business is safeguarded from problems in the long term.
Who needs tax accounting?
While there is a belief that individuals and small businesses don’t need to hire professional accounting, improper or incorrect filing of taxes can result in problems and additional costs for the business owner.
Accounting for tax purposes is known as tax accounting. Individuals, enterprises, corporations, and other entities are all affected. Even people who are not required to pay taxes are needed to engage in tax accounting. The goal of tax accounting is to track funds linked with individuals and corporations (both inbound and outbound).
Tax Accounting is Beneficial to all Corporations
Two sets of principles are applied when it comes to accounting and bookkeeping, in Chicago and around the United States. Tax accounting principles are the first, and financial accounting, generally recognized accounting standards, is the second (GAAP).
Corporations must adhere to a standardized set of accounting principles, regulations, and processes known as GAAP when compiling financial accounts and accounting for any financial transactions.
When compiling financial statements and tax payables, balance sheet items can be accounted for in various ways. For example, corporations can use the first-in-first-out (FIFO) technique to record inventories for financial purposes while utilizing the last-in-first-out (LIFO) method for tax purposes to prepare their financial statements. The latter approach lowers the amount of taxes owed for the current year.
Understanding IRS and Federal Regulations are Easier with a Tax Accountant
While accounting covers all financial transactions to some extent, tax accounting focuses only on transactions that affect an entity’s tax burden and how those transactions relate to correct tax calculation and tax document production. Accordingly, the IRS regulates tax accounting in the country.
To correctly submit tax information as required by law, the IRS also mandates the use of specified paperwork and forms.
Individual taxpayers’ tax accounting is only concerned with income, eligible deductions, investment gains or losses, and other activities that affect their tax burden. This reduces the amount of information required for an individual to manage a yearly tax return, and while hiring a tax accountant is an option, it is not required by law.
Meanwhile, general accounting would entail keeping track of all funds entering and exiting a person’s possession, regardless of their intended use, including personal expenses that are not tax-deductible.
The CPA must review more information as part of the tax accounting process from a business standpoint. While the company’s revenues, or entering cash, must be tracked in the same way that an individual must, any exiting monies directed toward corporate commitments add complexity. This can comprise funds earmarked for specific business needs and shareholders.
Types Of Accounting That Are Utilized
Many small firms use the tax method of accounting since it facilitates the filing of tax returns at the end of the year. This procedure is not by GAAP (generally accepted accounting principles). Instead, OCBOA (another comprehensive basis of accounting) has the tax base of accounting. The tax technique of accounting is widely accepted by banks and investors, making it acceptable and effective for many small businesses.
To correctly report and file their taxes, many companies utilize GAAP and convert the data at year’s end. This process, however, can be complex, as differences must be documented in detail for many years. A company following GAAP, for example, would capitalize expensive equipment, but in other cases, the company might expense the complete acquisition in its tax returns.
Depreciation may differ between GAAP and tax accounting, resulting in two sets of accounting calculations. Reconciliations are triggered by differences between the two procedures, which increases the risk of errors and accounting complexity. Using a single accounting arrangement, such as a tax basis, simplifies and clarifies the financial situation. Many businesses hire professional accountants to create their financial statements and tax returns. When the financial statement basis differs from the tax basis, more time and energy is expended, resulting in more significant fees, making tax services a more practical option in the long term.
5500 E Yale Ave Suite 350 Denver CO 80222
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