Business owners often lack the education and experience to handle all of their business accounting needs. Hiring an accounting practice to assist with the accounting functions of the business is a great way to ensure the books are in line with ethical standards and the law. A quick look at the Yellow Pages yields a lot of options, so it’s important to know what each service provides to select the one that is best suited for your accounting needs.
Tax Preparation Practice
A tax preparation practice specializes in preparing individual, partnership and corporate income tax returns. In this type of practice, tax returns are generally assigned to accountants by their specific area of specialization. In legitimate practices, all tax returns are prepared or reviewed by a certified public accountant. Most tax practices use tax filing software to prepare and submit returns.
Auditing services focus primarily on reviewing the financial statements and supporting documents for companies to issue an opinion as to whether or not the accounting was prepared in line with generally accepted accounting principles (GAAP). Many mid-size and most large corporations hire an independent auditing service annually to conduct a review of their books. Publicly held corporations are required to use an external auditing service.
Bookkeeping is the term used to describe everyday accounting such as processing accounts payable and accounts receivable, making bank deposits, processing payroll and preparing month-end financial statements. Small companies represent the largest customer base for a bookkeeping service since many small companies don’t have the budget to hire an accountant and neither the existing staff nor the owner understands accounting.
More companies are realizing the benefits of specialized accounting software, specifically management information systems, but many companies do not have personnel with the education or knowledge needed to perform a complicated software setup or conversion. For these companies, hiring a software conversion specialist is a great way to gain confidence that the conversion will roll out according to the designated timeline, and that the converted data will be correct.
Forensic accounting is a special type of auditing that is most often discussed in the legal arena. The word “forensic” implies an ability to use the information in legal actions, and that is the case. While auditors take information from financial statements and work backward down the paper trail, forensic accountants tend to focus on specific areas of a business that they know from experience to be problematic. Forensic accountants are usually looking for fraud, money laundering and other illegal activities. Another difference between auditing and forensic accounting is that auditors issue an opinion only on the correctness of the accounting data. Forensic accountants can issue opinions on the investment worthiness of a business.