Tax Accounting: Definition,
Types, vs. Financial Accounting
What Is Tax Accounting?
Tax accounting is a specific structure of accounting
methods focused solely on taxes rather than the
appearance of public financial statements. Basically,
tax accounting is the means of accounting for tax
purposes. The Internal Revenue Code governs tax
accounting. It dictates the specific rules that
companies and individuals must follow when
preparing their tax returns.
Tax Accounting Principles vs.
Financial Accounting (GAAP)
In the USA, two sets of principles are used in
accounting. The first is tax accounting principles and
the second is financial accounting. Financial
accounting is also called generally accepted
accounting principles (GAAP). Under GAAP, companies
have to follow a specific set of accounting principles,
standards and procedures.
Types of Tax Accounting
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Tax Accounting for Individuals: For an individual
taxpayer, tax accounting focuses only on
particulars like income, qualifying deductions,
gains or losses in investments, and other
transactions.
Tax Accounting for Businesses: When it comes to
businesses, more information has to be analyzed
as part of the tax accounting process. An
accountant in West Los Angeles primarily handles
business accounting.
What Is the Main Purpose of
Tax Accounting?
The purpose of the duties of an accountant in West
Los Angeles is to help companies and individuals make
proper tax calculations and prepare tax documents in
time for filing season.
What Is the Difference Between a
Tax Accountant and a
Management Accountant?
A management accountant is an internal member who
cannot work with external clients. A tax accountant,
on the other hand, is an external party who can work
with other businesses and individuals. Management
accountants work with their own companies, but tax
accountants help organizations and individuals comply
with tax requirements.
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