There is a popular belief that accountants are experts in tax returns.

20 December 2023 • FED Finance • 4 min

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While this may be true in some cases, most accountants actually have much broader expertise that contributes to the success of all kinds of businesses, large and small. In fact, the tax experts are tax specialists.

So what's the difference between accounting and taxation?

Here is more information about these two disciplines and the specific roles of accountants and tax specialists.

Definition of taxation

Taxation is a sector that concerns everything related to tax authorities and tax laws, meaning the laws and regulations concerning different forms of taxation (taxes, levies, etc.).

Its main objective is to generate revenue to finance government spending, such as infrastructure, public services, health and education.

Taxation is therefore a much more specific sector than accounting. While accounting encompasses all of a company's operations, taxation focuses on implementing strategies to help companies optimize their tax situation and meet their legal tax obligations.

Taxation also concerns individuals who are required to file tax returns annually.

Since taxation is a fairly complex field, businesses should hire a tax specialist to fully understand their rights and duties.

Definition of accounting

Accounting is a fairly broad discipline, but it is essential for a company's administration. It is a pillar of a company's decision-making process.

Accounting is a system for organizing and analyzing a company's financial data. Accounting documents, such as the balance sheet, income statement and cash flow statement, are essential for assessing a company's financial performance. It therefore provides a real-time overview of the evolution of a company's financial statements. Accounting is mainly applied to companies, both large and small, and encompasses various fields such as financial accounting, management accounting and cost accounting.

Good accounting management helps business leaders better understand their annual results and monthly balance sheets. It helps them define more accurate business objectives based on real data and determine the actions needed to achieve them.

Difference between taxation and accounting

The difference between taxation and accounting lies in their purpose and application. Taxation focuses on collecting taxes and complying with government tax laws, while accounting aims to record and analyze a company's financial transactions to assess its performance and make informed decisions about its financial management. Although these two fields are linked, they have distinct roles in the financial management of a company.

How do I choose between a tax specialist and an accountant?

The choice between a tax specialist and an accountant hinges on the extent of your financial needs. For businesses dealing with intricate tax requirements, international investments, or activities governed by specific tax regulations, enlisting the expertise of a seasoned tax specialist becomes paramount. This ensures not only optimal tax compliance but also aids in minimizing tax obligations.

Conversely, if your business demands day-to-day financial oversight, encompassing tasks such as bookkeeping, financial reporting, and cash flow management, that is what accountants do. Their role is vital in maintaining precise bookkeeping records and safeguarding the overall financial well-being of the company.

In essence, businesses stand to gain significantly from both accountant and tax specialist services, as their respective proficiencies complement one another, contributing to the development of a robust business strategy.

Do accountants do taxes?

Yes, accountants can indeed assist with tax-related matters. Although tax services may not be their primary focus, some accountants possess expertise in tax matters and can provide valuable assistance in navigating the complexities of taxation.

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