Since the beginning of the development of central government systems, everyone has been familiar with the concept of taxes. The compulsory financial charge that every citizen or business intensity is required to pay to the government. Have you ever tried to sort your taxes, only to realize how mind-bogglingly complicated it is? Often called a necessary evil, taxes are indeed difficult to maneuver. Thus, the concept of tax accounting and tax accountants emerges.
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The Perks of Being a Tax Accountant
What a Tax Accountant Does
Tax accounting refers to the methods of accounting that are concerned with taxes. Tax laws are based on government regulation which dictates the various rules. Which specify how companies and individuals should pay their taxes. Tax accountants take over the job of understanding tax laws and preparing statements based on tax returns of the individuals or companies.
In the broader sense, tax accountants ensure companies and individuals file their federal and state income tax returns and abide by the tax laws of the country. Tax laws can often complicate and undergo severe changes. It is the job of tax accountants to educate themselves on the various tax laws. Thus, determine the amount payable to the federal or state government.
Although it may seem simple on paper, the job of a tax accountant is often more than that. A tax accountant advises their clients’ ways to save money on taxes, minimizes the clients’ tax penalties, keep them updated about the changes in tax laws and help them in settling legal disputes about taxes.
How a Tax Accountant Emerges
To play such a diverse role in the business sector requires a very specific set of skills. So clients need to choose tax accountants carefully based on their credentials, education, and specializations. Years ago, tax accounting was simpler and agencies employed accountants temporarily during the income tax season. Those accountants often possessed an associate’s degree from a business school, had minimal bookkeeping skills and a general idea of tax laws.
However, with the constant change in tax laws and the increase in complications. Tax accountants are now hired year-round and generally required to have a bachelor’s degree. Often in a field associated with finance or business. It is also widely advised for aspiring tax accountants to be specialized. Or at least familiar with topics such as taxation principles, auditing, financial planning, cost and tax accounting and the federal, state and local tax laws. For a better or a more specialized job, tax accountant may even require master’s degrees in a field that is related to taxation.
Tax accountants are also often required to have some specific certifications specially focused on accounting. The CPA (Certified Public Account) in the US (or the ACCA in the UK) is required for a tax accountant to be able to work with tax documents and paperwork at the state level. Generally, a CPA can be useful to deal with basic financial planning and income tax issues.
Tax accountants can also license to receive an Enrolled Agent (EA) certification to work with federal taxes and represent clients being audited by the IRS. Unlike the CPA, an EA is slightly more specialized in dealing with federal laws and procedures. And an EA is often hired by business entities to deal with complex tax situations.
The Upsides and Downsides
The upside to being in tax accounting is the independence that the accountant receives in choosing his work. A tax accountant can either choose to work with companies directly as an employee or contractually with individual professionals. The route chosen would dictate the course and the type of work that a tax accountant would have to deal with.
Working in the corporate sector for a company, a tax accountant would usually have to work year-round as a member of the accounting department or as a supervisor in the accounting team. Generally, companies prefer to hire experienced professionals when looking for a tax accountant as the nature of the job is highly sensitive and specialized. It is also recommended for an accountant to be well-educated in government regulation and accounting principles to be a good fit for the role.
A tax accountant in the business sectors is required to review financial documents and ledgers, handle tax forms, maintain a connection with tax agencies and plan meetings with the accounting team about taxation policies. However, corporate tax accountancy is not cut out for everyone. And only for people who believe they would flourish in a corporate environment.
One might think that working with individuals would give an accountant more flexibility in terms of skills than in the business sector. However, this is rarely the case. Tax accountants working with individuals are often required to assist clients in their tax preparations and minimizing their taxes payable. A tax accountant is also required to handle audits and ensure that the client is proven to be transparent, should the need arise. Also, working with an individual can be stressful. As it requires an accountant to be on duty for their client, return phone calls, manage the clients as well as look for new ones.
A third route tax accountants can take is to become a forensic accountant. Who audits organizations and companies internally to pinpoint tax filing errors and minimize tax penalities.
It is now clear that a tax accountant’s jobs are not only limited to preparing tax return statements. But also to hold meetings, understand tax laws, contact tax agencies and minimize penalties and obligations of a company or an individual. This is a job that requires high levels of skills. It is a challenging career and only for individuals who enjoy working with research, thorough problem-solving and a fast-paced work environment.
On the other hand, the job of a tax accountant can often be time-consuming and stressful. Especially during the tax season, with deadlines looming overhead. The career also possesses a steep learning curve, which might easily discourage newer tax accountants and even demoralize older ones. However, it is a rewarding career, especially for individuals with a love for numbers and finances. This is one career that is becoming more and more relevant to the world as it changes.