TL;DR: Do Bookkeepers Do Taxes?
The short answer is yes, some bookkeepers do taxes. Some bookkeepers also choose to become tax preparers, but not all bookkeepers—even ones with decades of experience—have gone through the training and certification to become an Accredited Tax Preparer. This is a professional certification by the Accreditation Council for Accountancy and Taxation (ACAT) and is completely unrelated to standard bookkeeping training.
Experienced bookkeepers are equipped to provide you with pristine, tax-ready books, but being qualified to keep the business books does not equal being qualified to prepare taxes.
Who Should I Hire to Prepare My Business Taxes?
You have several options for tax preparation services, each with different advantages:
Accredited Tax Preparer — Professional Tax Services
These professionals have completed specialized tax preparation training and ongoing education. They understand complex tax situations and can provide strategic advice beyond just filing returns.
Certified Public Accountants (CPA) Tax Preparation and Filing
CPAs offer a different level of tax expertise, with extensive education, licensing requirements, and the ability to represent you before the IRS. They’re ideal for complex business situations or high-income earners as they are typically the most expensive option.
Large Tax Chains
While convenient and widely available, these services are typically generic and expensive. They rely heavily on the information you provide and may miss opportunities for deductions and credits. The preparers often have minimal training and may not spend adequate time ensuring you receive every possible tax benefit.
Enrolled Agents (EA)
Enrolled agents are licensed by the IRS. They are subject to a suitability check and must pass a three-part Special Enrollment Examination, which is a comprehensive exam that requires them to demonstrate proficiency in federal tax planning, individual and business tax return preparation, and representation.
Pitfalls of Hiring the Wrong Tax Professional
Choosing an unqualified tax preparer can be costly. Here are the risks of hiring the wrong person to file your taxes:
Lack of Proper Certification
Most bookkeepers do not hold the certifications required to file tax returns, which can lead to inaccuracies and compliance issues. Without specialized tax knowledge, they might miss crucial deductions or make errors that result in penalties.
Costly Penalties and Interest
Filing errors can trigger significant IRS penalties and interest charges that far exceed what you’d pay for proper professional preparation.
Common penalties include:
- Late filing penalties: Up to 25% of unpaid taxes
- Accuracy-related penalties: 20% of the tax underpayment due to negligence or substantial understatement
- Failure to pay penalties: 0.5% per month of unpaid taxes
- Interest charges: Compounded daily on unpaid balances. These penalties can quickly escalate into thousands of dollars, making the “savings” from using an unqualified preparer very expensive in the long run.
Limited Legal Representation
Beginning January 1, 2016, this is the only authority they have for PTIN holders without additional credentials – they can only prepare returns but cannot represent you before the IRS if issues arise.
Missed Tax Savings Opportunities
Tax preparation requires staying current with changing tax laws. Without the specialized knowledge of tax laws, bookkeepers might miss out on deductions or make errors that could result in penalties.
How Does Accurate Bookkeeping Support Tax Optimization?
Even if your bookkeeper isn’t preparing your taxes, they play a crucial role in tax efficiency. Here’s how accurate and tax-efficient bookkeeping supports paying the right amount (and no more) in taxes:
Organized Financial Records
Clean, accurate books throughout the year ensure all deductible expenses are properly tracked and categorized. This foundation is essential for any tax preparer to maximize your deductions.
Expense Documentation
Professional bookkeeping ensures you have proper documentation for business expenses, making it easier to substantiate deductions during tax preparation or in case of an audit.
Financial Reporting
Regular financial statements help identify tax planning opportunities throughout the year, not just at tax time.
Tax & Bookkeeping Solutions: An Integrated Approach to Save You Money
The best way to optimize your finances is to have your bookkeeping and tax preparation services handled by one company. However, it’s rare to find a bookkeeping firm that also provides tax preparation and filing. Luckily, Gutsy Money does both.
Our clients love knowing they have a whole team working together to ensure their taxes are compliant and they’re paying only what they should (and no more!).
Benefits of integrated services include:
Seamless Communication: No scrambling for a tax preparer at tax time – it’s all under one roof, so nothing gets missed in the transition from bookkeeper to tax preparer.
Complete Financial Picture: You can work with one company instead of being the go-between for two different professionals or companies.
Cost Efficiency: Integrated services save money because ATPs and CPAs usually charge by the hour for time spent gathering information from you or your bookkeeper. When your bookkeeping team already has all your business details, they can offer competitive flat fees with no surprise bills at tax time.
Year-Round Tax Strategy: With both services under one roof, you get proactive tax planning throughout the year, not just reactive tax preparation in April.
The Gutsy Money Advantage
At Gutsy Money, we’re one of the rare bookkeeping firms that also provides professional tax preparation and filing. Our team includes an Accredited Tax Preparer with 25 years of experience with small and medium business taxes of all entity types and countless industries.
What This Means for You:
Complete Financial Stewardship: We handle both your books and your taxes with the expertise each requires
No Gaps in Service: Your bookkeeping team understands your business intimately, ensuring seamless tax preparation
Strategic Tax Planning: Year-round optimization opportunities, not just April filing
Premium Service Experience: We are stewards of your financial foundations, creating clarity so you can focus on building your empire
Whether you need bookkeeping cleanup services, an accounting system setup, or full service bookkeeping, we provide the sophisticated financial stewardship your business deserves.
Our efficiency saves your money – ATPs and CPAs usually charge by the hour, which means they have to charge for their time to get the info they need from you or your bookkeeper. We already have all your business factors, so we can charge a lower flat fee, so there are no (giant) surprise bills at tax time.
The Bottom Line
So now you’re qualified to know whether bookkeepers do taxes. Some do, but only those with proper credentials and training. The key is ensuring your financial professional has the right qualifications for the services you need. For bookkeeping, look for experience and attention to detail. For taxes, verify proper certification and ongoing education.
The smartest approach? Find a firm that excels at both – providing you with meticulous bookkeeping throughout the year and expert tax preparation when you need it. Your financial foundation deserves this level of comprehensive, professional attention.
Visit The Bottom Line to read more of the latest and greatest entrepreneurial and business finance articles.
