Financial vs Tax Accounting

One type of accounting that is well-known is tax accounting. According to Investopedia, tax accounting is “a structure of accounting methods focused on taxes rather than the appearance of public financial statements”. Tax accounting applies to individuals, businesses, and corporations. Tax accountants must use the Internal Revenue Code (IRC) to provide accurate tax returns.

Some responsibilities of tax accountants include:

• Preparing federal and state income taxes

• Calculating and filing property taxes, sales taxes, and licenses

• Preparing and filing 1099 forms

• Assisting with tax audits or legal disputes

The second type of accounting is financial accounting. Financial accounting is a branch of accounting that involves a process of recording, summarizing, and reporting transactions from a business. Financial accounting uses generally accepted accounting principles (GAAP). Some responsibilities of financial accountants include:

• Handling of data

• Preparing statements

• Complying with regulation

• Advising management

• Preparing budgets