Not All Tax Professionals are Created Equal

When you first consider hiring a tax professional for business or personal use, it can be confusing to sort through all of the different terms that exist.   

Three terms that you’ll probably hear a lot are “bookkeeper,” “accountant,” and “CPA.” It is important to note that, though it doesn’t always seem like it, each of these terms denotes a very different job, and it’s important that you hire the right one for your specific purposes.

Bookkeepers

Bookkeepers are typically hired for business purposes. Their job is literally to “keep” or maintain the books and financial records of their clients in order.

Modern day bookkeepers often use specialty software to make their jobs easier, and they are definitely tasked with a lot of jobs. These include recording transactions- both ingoing and outgoing, inventory management, and generating financial reports as required by the business structure.

Accountants

Accountants are different from bookkeepers in that they do a whole lot more. They sometimes do bookkeeping tasks and additional tasks, or they may do only the “additional” part.

Their main job is to prepare financial statements, prepare reports, and basically keep the business’s finances on track. It is important to understand, however, that accountants cannot sign tax returns or represent their clients in the event of an audit.

CPAs

The most prestigious job in this industry is that of a CPA. These professionals are accountants with additional qualifications who are certified by the state to perform their duties.

They do everything an accountant would do, but they also prepare tax returns and, unlike accountants, can represent their clients during an audit and sign tax returns.

As you can see, there are big differences between the different types of financial professionals, and only you can decide which option is the best fit for you and your business or for your own personal needs. With that said, though, most people will find that hiring a CPA, who can do absolutely everything they might need, is the best option. The choice, however, is yours.

Trump on Taxes

There’s been a lot of talk lately about the tax changes President Trump is attempting to make. 

There are some changes that can be expected as a result of these plans. For example, the Senate intends to reduce the corporate tax rate to 20% in 2019 with the House doing so in 2018. The plans also call for reduced income tax rates, doubled standard deductions, and no personal exemptions.

As you can imagine, people have strong feelings about these changes, but, no matter how you feel, it’s important to educate yourself on the new plans and to be aware of how they might affect you.

Changes Galore

One of the biggest changes under the Senate plan is a lowering of tax rates, though it does keep the same general income brackets. The House Plan, however, makes it so that only four income tax brackets exist, and it does lower a few tax rates in the process.

Also, as mentioned above, the two plans eliminate itemized deductions, something that many people find upsetting. There are some exceptions to this new rule, such as charitable contributions and retirement savings, but the truth is that many of the deductions people rely on will be taken away.

These are actually just a few of a great many changes, so if you feel that you may be affected by Trump’s tax plan, it’s definitely a good idea to “dive deeper” and learn more.

And, for help surviving and preparing for the transition to Trump’s type of taxation, be sure you have a qualified CPA working on your side. It could make all the difference in how well you (and your finances) hold up once these changes go into effect.

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New Rule will Affect Businesses

A new rule was recently passed that will change the way companies record revenue. The rule, passed by the U.S. and global rule makers, won’t go into effect until 2017, but many business owners are already gearing up for the changes it will bring about.

Under the rule, many businesses will need to change the rate at which they book different parts of their revenue. The total revenue will likely stay the same, but performance results could fluctuate due to the new timing that will be in effect.  

While many businesses have mixed feelings about the new rule, experts feel that it will help to prevent accounting fraud, which is often committed by speeding up or putting off reporting of revenue. They also believe it will make revenue reports more true to the rate at which companies are providing the goods and/or services that generate that revenue.

Is your business prepared for this change? If you need help getting ready or simply understanding how the change might affect you, talk with your business CPA. If you don’t have a CPA, then find one at Susan S. Lewis, Ltd. of Naperville.

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• The Wall Street Journal: New accounting rule will alter how firms book revenue (marketwatch.com)