What Does an Accountant Do? Accountant Obligations Explained
Some accountants do more than just prepare taxes. Learn all about accountant obligations and what services they may provide. Not only that bu,t learn about the different kinds of accountants that specialize in specific fields.
Accountants are busier than ever these days, which is really no surprise. For most people, finances become more complicated over time, and they may need help navigating their financial future. More than just tax advisors, accountants can steer people toward financial security. Below, we cover what you need to know about accountant obligations and what these professionals can do for you.
General Accountant Obligations
The following are some typical responsibilities accountants may be tasked with at their place of business or practice. These largely depend on the type of accounting the professional specializes in. In addition, businesses may decide to assign them other duties as they see fit.
Inspecting financial documents for accuracy and comprehensiveness
Preparing financial reports
Maintaining up-to-date records/bookkeeping
Investigating and correcting numerical discrepancies and other errors
Performing audits
Advising clients on areas where financial efficiency can be improved
Performing data and risk analysis
Offering tax preparation and advice
Compliance is also a major responsibility for accountants. They must stay on top of ever-changing laws and regulations, taking extra care to ensure that financial documents and record-keeping remain in compliance at all times. Additionally, accountants are required to always act with integrity.
General Accountant Skills
According to Northeastern University, an effective accountant possesses a mix of technical and soft skills.
Technical Skills
Business knowledge: A basic understanding of how a business functions
Computer literacy: Computer savvy and the ability to use computer-based tools such as accounting software
Basic math skills: A rudimentary comprehension of math (education in advanced mathematics isn't necessary, as there are computer tools that can easily perform advanced calculations)
Data analytics: The ability to analyze data and leverage it to make decisions and predictions
Soft Skills
A talent for communicating: Accountants have to interact with audiences of all types, so they need solid communication skills. The ability to communicate effectively to individuals from all walks of life is an invaluable skill in the accounting field.
A focus on detail: These professionals get paid to sweat the small stuff. They deal with large amounts of financial data, where even a slight error can wreak havoc on the bottom line of a business or individual. A good accountant scrutinizes every morsel of data for accuracy and takes corrective action if necessary.
Types of Accountants
There are many types of accounting. Accountants may be any or some of these things:
Public accountant
Management accountant
Government accountant
Project accountant
Forensic accountant
Social accountant
Personal accountant
Tax accountant (or tax advisor)
For most people, a tax accountant is probably what comes to mind when they think about tax advisors because almost everyone pays taxes of some sort. However, these accountants should not be confused with tax preparers. The two are not the same.
The Difference Between a Tax Accountant and a Tax Preparer
While both can act as tax advisors, there are some fundamental differences between a tax accountant and a tax preparer, particularly when it comes to experience and education.
Many tax accountants are Certified Public Accountants (CPAs) and have at least a bachelor's degree. CPAs must pass a CPA exam and meet state licensing requirements. They are also typically more knowledgeable about tax codes.
A tax preparer who is not a CPA can compile and file financial documents. But unlike a CPA, they will not be able to help in the event of an IRS audit. CPAs can also help with financial planning and estate planning. A tax preparer may only help with the preparation and filing of IRS and state tax returns.
The Benefits of Hiring a Tax Accountant
There are many benefits to hiring a personal tax accountant. Here are some of the things a tax accountant can do for you.
Prepare and File Your Tax Returns
This takes a significant chunk of work off your plate so you can spend time on other things, and it ensures that you pay your taxes properly and on time. Your accountant will also look for any tax deductions you're entitled to so you pay as little tax as possible.
We know that preparing to file your tax returns can be a daunting task. To better prepare for next tax season, check out our article on How to Prepare For Next Tax Season
Maintain Vital Financial Reports
Preparing and maintaining accurate records can help prevent errors that could prove costly down the road. For example, even a simple mistake on your tax returns can cause you to incur a penalty if it results in an improper filing.
Ensure Compliance With All Federal, State and Local Laws
Not being in compliance with finance laws can sometimes result in hefty fines. Accountants stay up-to-date with these laws so that you don't have to think about them.
Provide Audit Support
A tax professional who is also a CPA can give you support and advice in the unfortunate event of an audit. They can also help you if you have not filed taxes for previous years or have failed to pay in the past. Should you need to, they can help you set up IRS payments or perhaps get the IRS to forgive back taxes. Tax accountants can also file for extensions with the IRS, giving you more time to submit your current taxes. However, you would still need to pay any estimated taxes on time.
Create a Budget
The accountant you hire can analyze your financial situation by looking at your assets, revenue, taxes and liability. They may create a monthly, weekly or even daily budget so that — going forward — you only spend within your means and are comfortably able to pay your bills. Creating a plan for the future helps many individuals stay on a healthy financial track.
Final Thoughts
Many people only turn to tax advisors when "that" time of the year rolls around. But as you can see, the obligations and skillsets of accountants are many and varied. Make sure any professional you're thinking of hiring is qualified to meet your needs.