Working with an accurate tax service is a prerequisite for accurate financial reporting and carrying rich quality tax operations. This is because most businesses in the USA are either small or mid-size. Therefore, they either don’t have a dedicated department for tax accounting and operations or don’t have the expertise and the tools to carry out high-quality tax operations.
In this guide we will take a closer look at why a business needs accurate tax services and the benefits these services entail. However, before that, let us get a brief overview of business taxes.
An Overview of Business Taxes
Establishing and operating a business is not easy – it involves carrying out financial operations and ensuring compliance with government regulations. The business is required to share its profit as taxes to the state and federal government.
The different types of taxes a business pays include:
- Employment Taxes
- Income Taxes
- Payroll Taxes
- Excise Taxes
- Estimated Taxes
- Sales Taxes
- Property Taxes
- Local Taxes
However, the exact tax rate and amount depend on the type of business and its total income.
A business can be of various types and is categorized on the basis of its structure or size. The different types of businesses, according to their business structure, are as below.
1. Sole Proprietorship
A sole proprietorship is a business not registered as a corporation and owned by one individual. However, the limited liability corporation solely owned by only one person doesn’t qualify as a sole proprietorship. It is because the company is already a corporation. We will see what a corporation is in the sections ahead.
A partnership is when two or more individuals come together for business or trade. The partners might contribute labor, skills, money, or property to the company and have a share in its profit or loss. Filing tax returns for the partnership is quite tricky.
Every year, the partnership needs to file the information about the income, deductions, and losses from the operations. The partnership passes through the profits or losses to the partners.
However, the partnership doesn’t pay income taxes. Instead, the partners must report their part in the company’s income in their personal taxes. Therefore, in the case of the partnership, it is not the company that pays the income taxes but the partners.
A corporation has a significant distinction from a sole proprietorship or partnership. In the beginning, the shareholders exchange their property and/or money for the company’s stock, giving way to the corporation.
The C corporation is recognized as a separate entity when it comes to federal income taxes. This means that the business owners are not directly liable for the income taxes. A corporation pays taxes twice – once when it earns the profit and later when the income is distributed among the shareholders.
4. Limited Liability Corporation
Each state has different regulations for limited liability corporations, and this business structure is approved by the state. The owners of the business are called members, which might include individuals, corporations, foreign entities, and other LLCs.
However, that is the case when the states do not restrict ownership. This depends on the state, and there are special laws for the foreign LLCs. Additionally, banks and insurance companies cannot be a limited liability corporation.
The IRS will classify an LLC as either a corporation, partnership or as part of the LLC owner’s tax return, depending on the LLC’s preferences and the number of members.
5. S Corporation
An S corporation chooses to “pass-through” the losses, corporate income, credits, and deductions to the shareholders, as far as the federal taxes are concerned. To become an S corporation, the company files Form 2553.
Therefore, the shareholders of S corporations file their tax returns at their individual income tax rates. The shareholders report the flow of income and losses on their taxes.
Therefore, a S corporation doesn’t need to pay the taxes twice and avoid double taxes.
To be eligible to become a S corporation, a company must meet the following criteria:
- It should be a domestic corporation.
- The shareholders should be individuals, certain trusts, and estates and not corporations, partnerships, or non-resident alien shareholders.
- The total number of shareholders should not be more than 100.
- There should not be more than one class of stock.
A business organization is ineligible to be a S corporation if it is:
- Some specified financial institutions.
- Insurance companies.
- Domestic and international sales corporations.
What are Accurate Tax Service and Who Needs It?
Accurate tax service are rich-quality tax services offered by a dedicated tax and accounting firm. These firms allow small, mid-sized, or large businesses to outsource their tax operations. Therefore, businesses do not have to maintain an in-house tax department or worry about tax operations.
Delegating the tax operations to a service provider enhances tax research, preparation, and planning. It aids in improving the performance of the company and boosts overall profitability.
Moreover, the businesses transfer the burden of ensuring compliance with federal and state tax regulations to the American tax service provider. This allows the management to focus on the crucial business activities.
What Does an Accurate Tax Service Provider Offer?
Business tax includes more than just the preparation of tax returns. Therefore, it is obvious that accurate tax service providers offer a plethora of services, such as:
1. Tax Planning
Tax planning means consulting an expert to come up with strategies to conduct tax operations efficiently and reduce tax liabilities.
A tax expert with proficiency in federal and state regulations has extensive knowledge of tax-saving opportunities. Therefore, tax service provider helps businesses in planning out their taxes and availing benefits of tax breaks, deductions, and credits.
Taxes depend on the accounting system, and to reduce tax liabilities, a business might need to make changes to the accounting system. Therefore, it is always advisable to take the help of tax planning when you start a new project.
2. Tax Accounting
Accounting is imperative for preparing and filing accurate taxes. However, once the financial gains are registered in the journal, they should be later adjusted to determine the tax liability.
When calculating the taxable earnings of the company, tax accounting considers total revenue, potential deductions, and tax credits the business is eligible for. Therefore, the income reflected on the income statements can be different from the taxable income.
The accurate tax service provider carries out tax accounting for the organization and ready it for tax preparation.
3. Tax Preparation
Tax preparation can be pretty tedious and tricky when the workflow increases.
When it’s the tax season, much of the management and accountant’s time is often diverted to tax preparation. This might slow down the core activities and hampers the ongoing projects.
Moreover, it demands the time and attention of supervising the operations and ensuring accurate tax preparation. A better option is outsourcing the tax preparation to the service provider.
These firms efficiently prepare taxes during the season. This allows the business to carry on their taxes smoothly, even during the tax season.
4. Prepare for Tax Audits
Internal tax audits help determine the correctness of the financial records and tax reports. Often, the tax authorities might conduct an audit on a company’s taxes.
The accurate tax service provider represents the company during incidents, events or an inquiry from tax authorities.
The outsourced service provider prepares the company for the audit by navigating the audit process and helping gather the documents required. Accurate tax service providers also represents the clients before the IRS.
5. Financial Analysis
The company needs to carry out an in-depth analysis of the financial records and reports. This requires advanced software and tools and the skillset to utilize them.
The outsourced accurate tax services help the company conduct financial analysis to evaluate its performance. This helps the company determine the scope for improvement and aid its growth.
6. International Taxation
Taxation becomes way too complex when international borders are involved. The company accountants and employees don’t have in-depth knowledge of cross-border tax laws and regulations.
Therefore, companies operating globally or across different nations need international taxation services. Accurate tax services help companies with international taxation and allow them to operate globally without a hassle.
7. Mergers and Acquisitions
Tax planning is a significant concern when companies come together in a merger or when there is an acquisition.
Therefore, on the occasion of a merger, divestiture, or acquisition, the company needs to plan the distribution of assets and the taxes the company will be liable to pay in the future.
The tax services provider guides the company throughout the merger and acquisition.
8. Risk Management
A business needs to assess the potential risks and come up with strategies to manage and minimize them. An accurate tax service provider helps businesses analyze the risks and devise the perfect strategies to manage the same efficiently.
9. Tax Research
In-depth tax research goes a long way in analyzing tax operations and reducing tax costs. Moreover, tax research gives a deep look into the cash flow of the business and evaluates its profitability.
As a result, tax research helps the company enhance its performance and reduce overall expenses.
The Accurate Tax Service Your Business Needs
Are you looking for an accurate tax service suitable for your business that also fits your budget? We offer premium tax services at a very affordable rate for small and mid-sized businesses. Moreover, our tax services come with full-fledged features.
Take a look at the different tax services we offer:
- Tax Accounting
- Tax Planning
- Tax Preparation
- Tax Advisory
- Tax Audits
- Tax Representation
- Tax Risk Management
- Tax Research
- Corporate Tax Planning
Our firm offers the highest standard of tax services, and our excellent client relations speak of our commitment to serving the industry.
Allow us to be a partner in your journey to new heights. Contact our tax advisors at +1(800) 580-5375 and benefit from our accurate tax services. Take a free trial today!