Accounting for Management vs. Taxes

When entrepreneurs start a business, they often think that their accounting priorities are basically to pay their people and to prepare an accurate tax return. However, business accounting and tax accounting can be much more sophisticated than you might think.

To ensure your business’s success, start by thinking of business accounting and tax accounting as two different types of accounting. Here’s the difference, and why you need a specialist for both.

Business management accountants

Some CPAs and other accounting professionals are experts at preparing financial reporting. The best business management accountants help business owners understand the story that their financials are telling, including how well their business is running, so they can make informed decisions about their future. With timely and accurate financial reporting, you’ll know how long your cash flow will cover operations if sales decline or how much you can invest in staffing or equipment for growth.

Tax accountants

Not all CPAs prepare tax returns. A tax CPA prepares taxes based on very specific, complicated, and frequently changing federal and state tax laws. The best tax CPAs help business owners plan how they can manage their spending to minimize their tax liability. The less they pay in taxes, of course, the more they can keep in the business or distribute to owners for personal use.

Tax accounting is an important part of any business strategy, but note that you should look beyond it to make business decisions. Tax accountants can help you keep as much of your income as possible (as permitted by law!), but management accountants can help you make as much income as possible.

In an ideal world, all of your accountants would work together to give you the best possible outcomes. At Syzygy, we’re business management accountants that help our clients run their businesses with useful financial tools and information. At the same time, we maintain strong relationships with excellent tax CPAs who further guide our clients with valuable tax advice. Together, we can ensure you feel well-informed and supported while you manage your business, and your money.