Why Tax Pros aren’t Always the Best Bookkeepers

Tax professionals often look at bookkeeping as something they do for preparing their tax returns. They focus on making the numbers streamlined only for tax purposes. However, as tax professionals adjust the financial entries, that does not mean they don’t know bookkeeping.

A tax professional’s job is not how to do bookkeeping; it is all about financial analysis and consulting. Following are the views of industry experts on why tax pros are not always the best bookkeeper.

Jake Hill, CEO of DebtHammer

It’s important to remember that professional bookkeepers are the best option for bookkeeping, not tax professionals. Bookkeepers have experience working for and with smaller businesses, and they have formal and non-formal training regarding accounting software.

Oberon, Founder and CEO of Very Informed

Many small business owners assume that tax pros are the best bookkeepers for their business. After all, who knows more about taxes than an accountant or tax preparer? However, there are a few reasons why this might not be the best choice for your business. First, tax pros are often busy during tax season, which may not be the best time for your business needs.

Second, they may not have the time or expertise to handle your day-to-day bookkeeping needs. Finally, their fees may be higher than those of a qualified bookkeeper. When choosing a bookkeeper for your business, consider all these factors to ensure that you’re making the best decision for your needs.

Charlie Southall Founder and CEO at Dragonfly

Professional bookkeepers certainly have some advantages, and tax pros do not.

The Tax professionals hold educational qualifications and often multiple degrees and diplomas in the field. On the other hand, bookkeepers have more experience handling businesses and look after small businesses often. They’re also trained in formal and non-formal accounting software, keep close contact with clients, and alter things accordingly.

Eric McGee, Senior Network Engineer at TRGDataCenters

No Formal Education in Accounting:

I believe many bookkeepers hold an associate’s degree in another field, a certificate from a training program, or neither of these formal accounting degrees. As a result, many bookkeepers feel undereducated and inadequate compared to CPAs, who need a master’s degree or the equivalent in college credits, or EAs, who must pass a demanding 3-part exam.

Confusion in Roles:

Also, remember that it is not the responsibility of the tax professional to be an expert in bookkeeping. For example, a CPA may be proficient in small business accounting software and knowledgeable about bookkeeping, but their schooling has equipped them more for analysis and consulting than for bookkeeping.

Johannes, Founder & CEO at Financer.com

Any business considered mostly has its finance team, which ought to work hand in hand. Such people are inclined to optimize the finances and flourish the business as the ultimate destination. However, tax experts cannot be confused with a bookkeeper (a common mistake people make these days).

Tax experts have their own set of functions to be driven around. Tax pros are required to be in touch with the current change in policies and procedures to make sure no mistake gets in their way.

Whereas bookkeepers are just professionals with some training or minimal qualifications to handle the accounts which don’t really require getting through all the financial technicalities

Therefore, tax experts can’t really do bookkeeping since they’re trained to save taxes for their companies and have many clients to be accountable for!

Bill Ryze, Chartered Financial Consultant

While professional bookkeepers don’t have the same qualifications as tax experts, they have some unique advantages. First, they have on-job experience working for different businesses. Their experience gives them a competitive advantage. Second, they have better knowledge of the daily operations of the client’s business. So they can do their job effectively.

Third, professional bookkeepers undergo extensive training, both formal and informal. Therefore, they are well conversant with business accounting software. Lastly, they focus on the managerial side of small businesses. Their main concern is what the client needs from bookkeeping to run their companies.

In contrast, tax experts view bookkeeping as a task they must do before preparing tax returns. So, their main focus is not what the client needs from bookkeeping. Instead, they need to balance the numbers to make them look right from a tax perspective. While there is nothing wrong with this approach, it could wreak havoc in the future.

Additionally, tax professionals may know how to keep records and could be conversant in using business accounting software. However, their training focuses on analysis, consulting, and balancing, not bookkeeping. Their primary focus is ensuring their clients pay minimum tax within the legal bracket. So, bookkeeping is not their priority, making them poor bookkeepers.

Adam Wood, Co-Founder of RevenueGeeks

I would say that a significant bookkeeping obstacle for many small business owners is not knowing where to begin. There are so many factors to consider that it can be a daunting undertaking, particularly for those with limited experience in business bookkeeping. You can help your clients get off to a good start by giving them a bookkeeping guide to follow. Emphasize the fundamentals, such as how to establish their bookkeeping system, what documents they must maintain, and how to reconcile their finances. If you are seeking to expand your consulting services, you might also offer to do a session on basic bookkeeping for their business. Once customers see how simple it is, they will be more likely to maintain it throughout the year.

Ellie Shippey, E-commerce Growth Specialist

Your business owner clients may be delaying their bookkeeping duties out of fear of making errors or because they have not yet mastered record-keeping. In addition to educating your clients, you might offer to analyze their financial statements for bookkeeping mistakes. Remind them of the standard operating procedures (SOPs) and internal controls you’ve implemented. For instance, you may be able to modify their access inside their accounting program or grant them a dedicated Accountant position so they cannot accidentally remove a journal entry or account. Appropriate controls and checks will instill clients with confidence in their abilities and reassurance that little mistakes do not necessarily result in catastrophic outcomes.

Conclusion

Bookkeepers have unique responsibilities and are qualified to use tools to manage financial entries daily. However, tax experts have different prospective on bookkeeping which might mean they are not a good fit for routine bookkeeping. So, to manage your financial data, hiring virtual bookkeeping services is an ideal option.