What Does A Tax Accountant Do? A Business Owners Guide

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Jamie Fryar
March 3, 2022

As a business owner, having an approximate knowledge of everything is necessary. But when it comes to the details, you need an expert to get things done correctly, especially when it comes to taxes. The need for an expert raises the question: what does a tax accountant do? 


Exploring the answer to this question requires understanding the narrow profession's requirements. Below, we will explore tax accounting, its different forms, and how this applies to you as a business owner. 

What is a tax accountant? 

A tax accountant is a specialized accountant who has in-depth knowledge of the federal, state, and local regulations regarding taxes. These specialists differ from "regular" accountants in that they specialize in providing services towards a client's taxes. 


All accountants work to balance and confirm the accuracy of financial records. For example, payroll accountants guarantee the accuracy of payroll information to ensure accurate employee compensation.


Tax accountants hold the duty of accuracy but include specific knowledge taxes. Their talents primarily lie in leveraging tax resources and providing tax savings for a business. 


Tax accountants also provide you with a stable connection to any changing tax laws. For example, you would want to know about a tax break to save your business thousands. Having a regular tax accountant can help identify this. However, you might also hire accounting firms for a tax review, or, consider a payroll software that can automatically do your tax calculations, including deductions and remittances, thanks to smart automations!

What education do you need to be a tax accountant?

Tax accountants typically require a Bachelor's Degree in Accounting. While some might get by with an associate's degree, they usually need the extra education to meet the high analysis requirements.


These accountants should have some existing experience under their belt. Often, tax accountants have a few years of bookkeeping experience to familiarize themselves with basic financial statements.

What skills do you need to become a tax accountant?

Technical skillsets for tax accountants include mathematics and attention to detail. Tax accounts must have strong knowledge of government regulations of their work areas. 

Tax accounts must know essential tax compliance and preparation. Many are also required to have a working knowledge of Microsoft Excel or a similar spreadsheet tool.  These accountants need to have verbal and written communication skills outside of technical skills. The social skills to communicate seamlessly and confidently across chains of command is essential across all jobs. 

What does a tax accountant do? 

Like payroll accountants must accurately measure employee compensation, tax accountants ensure you make accurate payments to government entities.

The duties of a tax accountant include the following:

  • Preparing state, provincial, and federal taxes
  • Creating budget plans from projected taxes and earnings
  • Calculating quarterly payment requirements for taxes (and paying them) 
  • Gathering data for specialized taxes (property tax, sales tax, etc.)
  • Providing accurate information related to tax audits
  • Inspecting accounting systems for accuracy 
  • Managing files of 1099, W-2, and W-4 forms 
  • Find potential tax breaks using knowledge of tax law
  • Communicating with stakeholders to ensure they know crucial financial information 
  • Assisting in organizing all forms of financial documents 


In situations where you hire a third-party tax accountant, you can also expect to leverage their expertise. In these cases, tax accountants might provide you with tax incentives based on government initiatives. 

For example, energy conservation is a high priority for some government entities. In purchasing energy-efficient equipment, you might be able to gain an additional write-off. 


Of course, tax accountants aren't only for discovering write-offs for your business. Our next section will reveal the different forms. 

What is a tax accountant?

Different types of tax accountants.

If you've read our blog before, you already understand many accountant types. Here's how they break out when it comes to those under the "taxes" specialty:

  • Private accountants
  • Business accountants
  • Auditors
  • Forensic accountants
  • Tax examiners 
  • Financial advisors 
  • Investment accountants
  • Certified Public Accountants (CPAs)

Private accountants

As an employee of a company, you might hire many private companies to handle your accounting. These companies are full of personal accountants who help you find small-time tax benefits. These professionals help with these duties:

  • Educating you on basic deductions (the Earned Income Credit or the Child Tax Credit)
  • Giving you advice (Match your business's 401k or start a Health Savings Account)
  • Providing you information on how many people you can claim. (i.e., do I claim my wife if I make more money than her?)

Business accountants

Hiring a business accountant covers a wide range but typically helps in any incidents regarding company money. These groups include bookkeepers, tracking day-to-day expenses, and high-earning accountants running a successful business. Their duties include the following:

  • Tracking day-to-date financial transactions
  • Producing and analyzing financial statements 
  • Understanding the basic requirements of business-specific tax needs 

Auditors

Tax auditors exist in both an external and internal sense to confirm the validity of financial statements. When the IRS requests an audit of your business, you'll have an external auditor verify this information. Internal auditors are necessary to confirm the accuracy of large companies. Common duties include:

  • Holding companies accountable with local and federal tax law
  • Ensuring additional requirements associated with specific businesses are met (i.e., sales tax for retail stores)
  • Confirming that all employees are receiving health insurance if they work enough hours 

Forensic accountants

To be a forensic accountant is someone who works in the legal industry. They often are part of insurance companies or legal teams needing a keen financial eye. Those in forensic accounting typically follow these duties:

  • Examining external financial records to ensure tax compliance
  • Providing expert advice by request during trials
  • Delivering financial information to insurance companies to ensure financial compliance 

Tax examiners 

Tax examiners work on government entities to collect any amount owed from individuals and businesses. These people result from a failed audit or are assigned cases in response to underpaid taxes. Not all examiners are accountants but usually require accounting knowledge. Their duties include the following:

  • Checking federal and state income taxes of individuals and businesses to ensure accuracy
  • Contacting taxpayers to discuss underpayment of taxes 
  • The collection of underpaid taxes 

Financial advisors 

Advisors provide financial analysis for businesses that need another perspective. They produce analysis reports using existing tax information to determine where you might make improvements. These people work as both internal and external agents with these duties;

  • Assist businesses and individuals with money matters
  • Provides advice regarding budget, savings, insurance, and tax strategies
  • Provide their opinion on a business's goals based on their financial position

Investment accountants

Investment specialists work with a specific kinds of taxes. Businesses with a large amount of working capital use these accountants to determine a sound strategy. An investment accountant might help in the following ways:

  • Giving investment advice to produce a better return
  • Providing information on projected taxes with different ROI (Return On Investment) scenarios 
  • Assisting in managing and reporting investments 

All accountants eventually lead to taxes in some way. But having specific tax expertise is necessary to meet most requirements. 

What is the difference between a CPA and a tax accountant?

CPAs, or Certified Public Accountants, can include tax accountants. However, you do not need to be a CPA to become a tax accountant. 

Instead, CPAs must meet these requirements:

  • Meet minimum work experience requirements (that changes depending upon the state)
  • Pass the Uniform Certified Public Accountant Examination from the IACPA (Institute of Certified Public Accountants)
  • Acquire a Master's Degree in Accounting 


Being a tax accountant doesn't mean you need a Master's Degree or minimum work experience. You also do not need to pass anything (besides exams while getting a Bachelor's in Accounting)


An alternative for tax accountants who want more credentials is to become an Enrolled Agent.
An EA (Enrolled Agent) needs to meet these requirements:

  • Pass the IRS's Special Enrollment Examination
  • Keep up-to-date with the latest regulations through 16 hours of tax courses a year and 72 hours of classes every three years. 

EAs allow tax accountants to represent a client if a tax issue comes up. EAs can also expand their practice beyond their hiring company, allowing them the same level of access to CPAs. EAs specialize their service for taxpayer information. 

Why does my business need a tax accountant?

When asking why we go to our original question: what does a tax accountant do? A tax accountant ensures that you are federally and locally compliant with all tax regulations for a business. So you need a tax accountant to offer a dedicated source of compliance for your business.

Not having a tax accountant puts you at significant risk. Late taxpayers have substantial penalties associated with past due accounts. Worse, if you underpay taxes, penalties can be as much as 15%, resulting in an unnecessary drop in your operating income. 


If your business fails to pay taxes over the years, you will need to pay interest.
Companies that fail to pay these taxes on time are in a cycle of being behind. Those who have lived through their youth dealing with credit card debt share a similar experience of constantly needing to catch up.

If your business fails to pay taxes over the years, you will need to pay interest.

You might also be at risk of a tax audit requiring you to confirm your financial transactions for the year. Ideally, having a tax professional (or accessible means of sorting) available should simplify this. Regardless, it's time you could be spending on other, more essential aspects. 


If you area tax accountant, and you are looking for a way to speed up your workflow, check out our article: 10 reasons to use payroll software for tax accountants.

How can I do my own business taxes?

You can do your business taxes manually or use integrated payroll software to calculate your tax deductions!

Your tax deductions might vary depending on the size and structure of your business. Here are just a few examples of what you can use:

  • Microsoft Excel is a spreadsheet software excellent for calculating large data sets (like daily transactions and how much they are taxed).
  • Google Sheets is a free alternative to Microsoft Excel, acting as an excellent way to help you with data. 
  • Shopify is an eCommerce platform that calculates and pays sales tax and varies depending on the state you are in. 
  • Wix, Squarespace, and WordPress have several integrations for selling online services that will calculate sales taxes for you.


"Manual" calculations of tax will need to be done fairly regularly. In this case, you might have an Excel sheet showing the day's transactions. Understanding Excel formulas and taking percentages out of your gross profits will help simplify your process. 

If you work in a purely online business, a lot of software has some tax integration. For example, people who use Shopify for eCommerce will find sales tax calculated for them. However, Shopify won't handle the automatic calculation of some taxes.

Benefits of payroll software for tax accountants.

The problem with many automated features is that they don't account for payroll taxes. But with payroll software for tax accountants, you can cover taxes beyond your sales tax. There are several benefits to using payroll software:

  • Better scalability for businesses who want to hire employees
  • Offers automatic calculation of state and federal taxes associated with employment
  • Provides flexible tax solutions for overtime or holiday pay 
  • Gives the same data to your employees (so you don't have to take needless calls)

Good payroll software should offer dual-facing solutions. This way, it provides you with automatic calculations on top of data for employees. 

This way, you can easily survive tax audits with readily available employee data. This enables your business to focus on growing rather than the tax implications of hiring another employee. 

Good payroll software doesn't limit itself to payroll software. It's a complete HR platform that benefits everyone involved, regardless of what industry you need it for. 

What else do I need to know about tax accountants and what they do? 

While you might argue that all accounting is tax accounting, it requires a unique skill set to balance this information. Knowing local and government regulations while worrying about accurate financial statements can be challenging. So the next time you see them, thank your tax specialists for ensuring you aren't having uncomfortable conversations with auditors. 

So the next time someone you know asks, "what does a tax accountant do?" Show them this article. We hope that this blog helps you better understand the field so you know what you need as a business owner. 

Imagine an automated payroll tax solution.

Manual tax calculations, deductions and remittances when it comes to payroll tax can take hours to calculate manually. Not to mention the possibility of making an error, and incurring a fine. Wouldn't it be a dream if there was a solution that could automate any tax calculation, so payroll tax calculations were just, done?

Well there is. By investing in a smart automated payroll solution like Push, you don't have to spend any time calculating, or remitting your taxes, it is all done for you.
Book a demo to learn more.

Curious to learn more about payroll in general, and how it apply's to your cannabis dispensary?  Download our free guide below to learn more about payroll remittances for restaurant owners, and more!

what does a tax accountant do.


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