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What Does A Tax Accountant Do

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  • 23-05-2022
What Does A Tax Accountant Do

What does a tax accountant do for a business?  Find out more about the responsibilities of a tax accountant and how our small business can benefit from professional accounting services.

Tax accountants main duties

Tax accountants typically have two main duties in the role they perform for their business clients. The first is to create accurate tax return documentation for HMRC (HM Revenue and Customs) that follow tax laws and tax regulations.

The second duty is to inform the business owner about your tax returns and the overall financial health of your company, as regards your tax contributions. As part of researching and creating these tax returns, they will also devise tax strategies for the private companies tax accountants work for.

These strategies will improve the tax efficiency of a company and minimise or eliminate tax payments they need to make. They will arrange audits with the appropriate taxation authorities to ensure full legality in a company's financial operations.

An independent chartered tax advisor will conduct tax preparations and generate financial documents and tax forms for various companies, including private and limited companies, non-profit organisations, those in the finance industry and even private individuals.

Given the variety of their work and the broad range of clients they may have to work for, a tax accountant needs at least a bachelor's degree education, if not a master's degree and professional qualifications, and should have a practical understanding and in-depth knowledge of how businesses operate and general business concepts and theories. 

What Is Tax Accounting?

Whether working in-house or through an independent payroll or accountancy service, tax accountants prepare tax returns and tax forms before submitting them to HMRC on behalf of a business or individual.

A secondary use of tax accounting is to help individuals or companies to boost their savings by reducing the amount of corporate tax they need to pay and helping them avoid late payment penalties.

Anyone can benefit from efficient tax accounting, including:

  • Private Individuals
  • Companies
  • Government Agencies
  • NGOs
  • Financial Service Firms
  • Insurance Companies
  • Self-Employed People

The busiest time for tax professionals is the period of the tax year, from January the 1st to April the 15th. Outside of this window, tax accountants provide a range of other services that individuals and companies can benefit from. These include performing financial audits, creating tax strategies and financial plans, and providing professional advice on investments and efficient asset management. 

What Are the Responsibilities Of A Tax Accountant?

The main responsibility of a tax accountant in their role is to ensure a company's or individual's tax return documents are all legally in order and submitted on time to HM Revenue and Customs.

Again, in the meantime, between the filing deadlines, tax accountants can also help these people or organisations to create tax strategies and tax planning advice so they can use their money in the most productive ways.

This planning and strategising will help companies and individuals reach their desired financial goals, which the tax accountant will also help them establish.

Qualified tax advisors will also keep their clients fully updated on what is enclosed when submitting tax returns and how their individual client's finances are performing regarding their tax contributions.

This means they will work much harder during the tax year when they must produce tax return documents or tax forms for filing.

The majority of their wider responsibilities include:

What Does A Tax Accountant Do?

By looking through a company's financial statements, a tax accountant will work to get a clear idea of the overall financial condition of that company.

To do this, they will look into all the detailed financial statements you have to create a full picture of how your company is performing.

Simultaneously, your tax accountant will prepare tax documents, financial records and tax forms, ensuring they comply with the current UK tax laws and mandatory regulations. 

As part of their task to help their clients use their money in more productive ways, a tax accountant is responsible for creating viable budgets for their respective operations.

As part of making a business or private individual's operations more profitable, therefore increasing their income, the tax accountant must also explain how this increased income will affect their tax returns.

Alongside helping to create accurate and timely tax return documents, tax accountants can also help the individuals within a business organise their personal tax and financial records. 

All tax accountants maintain their clients' tax records as part of good practice, meaning the businesses or individuals they help with their taxes can access their financial records whenever they need them.

This will also aid whenever forensic accounting is needed; when regulatory bodies choose to investigate a client's financial situation.

Naturally, tax accountants are responsible for calculating how much tax their clients owe to HMRC when collating their tax returns on an annual basis. This is the most important responsibility tax accountants have when working for a client.

They will also inform the business or sole trader if they are due any refunds from HMRC or if they have outstanding balances. They will also help them organise their finances to avoid a late payment or missed deadline penalties.

Suppose a client already has an accounting system in place before they hire the services of a professional tax accountant. In that case, that accountant may have to review these systems with an eye toward efficiency and effectiveness.

This can be fruitful if it reveals any issues or regular errors that keep cropping up, allowing the individual or business to remedy them.

Of course, without effective and thorough communication, tax accountants won't be able to relay what their clients are required to do regarding their taxes.

Clients must remain involved in their tax arrangements and the tax return process, and it is crucial that they understand the filing process and how their tax returns work.

Therefore, tax accountants must communicate with their clients, providing timely and accurate information. 

Important skills for a tax accountant to have

Given the range of tasks tax accountants are required to do for their clients, there are some specific skills you will need to become a tax accountant successfully.

These skills, often found in tax accountant job descriptions, include:

The first step in becoming a tax accountant is that they will be expected to have an appropriate degree, whether in tax specifically or a degree in accounting more generally. This is necessary because accountants need to understand how finances and taxes work.

An appropriate degree will also make an accountant more attractive to prospective employers. Clients will feel that an accountant can handle their financial information professionally if they have the right education.

Naturally, competent mathematics and computational abilities are highly valued skills in a professional tax accountant. Given they will be handling large amounts of numerical data and tax computations each day, these skills are vital to being a successful tax accountant. 

Alongside these and their education, tax accountants may also choose to achieve professional certifications or relevant qualifications from various organisations or institutions, such as the Institute of Chartered Accountants.

They can become certified public accountants through this, and their prospects will bloom. 

Research is also an important skill for tax accountants to have. This is because tax laws can change depending on the government in power, so to keep up with developments and changes to relevant tax laws, an accountant must be able to conduct efficient research.

This also helps if the tax laws are relatively vague, with research helping to clear up uncertainties regarding individual or business tax legislation. Extensive knowledge of tax laws is crucial for a professional tax accountant.

Suppose the laws are similar to those in other countries, or international tax applies to a company's operations. In that case, research will also reveal how individuals and businesses interpret those laws in other countries, aiding you in creating an efficient tax strategy.

Research skills can also be used to better understand a tax accountant's role and any jargon or technical language used in it. Tax accounting can be a complicated role, so understanding it as best as possible will help with continuing professional development and professional guidance.

Again, communication is vital in tax accounting. Given that they have to liaise with their clients on a regular basis while they file their taxes, receiving and delivering financial information and tax advice, being able to communicate effectively is very beneficial for tax accountants.

This will also help build trust with clients, possibly recommending an accountant to more and more potential clients. This is also essential for large companies or high net worth clients, who don't want half their day wasted talking about every tiny aspect of their tax forms.

An obvious benefit of having great communication skills is eliminating misunderstandings or miscommunication between you and your clients. This is especially useful in the complicated business of tax accounting.

Articulately explaining what you and your client need to do regarding their taxes, such as tax planning or strategies, will save you time and maintain good relations with your employers.

Most tax accountants work in a collaborative role, so effective teamwork skills are also essential. Tax accounting can be stressful, especially during the busy tax season. Therefore, working as a team as part of an accountancy firm can help relieve this stress and make your job easier.

Of course, a team project rarely goes smoothly, so combining your communication with your teamwork skills can help resolve any tensions or disruptions your team might encounter. Teamwork also goes hand in hand with your communication skills, so teamwork is always necessary, even in self-employment. 

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