Professional Bookkeeping and Tax Expertise: Why Your Business Needs Both
Five Steps to Ensuring Your Company’s Financials
Are Complete, Compliant, and Tax-Prep Safe
Many business owners assume that bookkeeping and tax preparation are separate tasks handled at different times of year. But here’s the truth: your books are the foundation of your tax return and the foundation of smart financial planning. If your books are incomplete, inconsistent, or transactions are misclassified, it can cost you time, money, and peace of mind.
That’s why a tag team approach—one that blends professional bookkeeping with tax strategy is the most effective for your business. The reason is simple: bookkeeping and tax preparation are essential parts of your financial strategy that are intended to work together. When you put them together, you will have powerful information and insights to leverage for better decision-making, compliance, and growth.
Use this practical guide to help you assess whether your company’s bookkeeping and tax support is adequate.
1. Reconciliation: The First Line of Defense
Reconciliation means comparing your bookkeeping records to your bank and credit card statements to ensure everything matches.
Ask yourself:
Are all accounts reconciled through the most recent month?
Do your balances reflect your actual cash position?
Are there old or uncleared transactions that need attention?
Without regular reconciliation, your reports may be misleading—and your tax return could be based on inaccurate data.
2. Chart of Accounts: Structure Matters
Your chart of accounts organizes your financial activity. It should be tailored to your business and tax reporting needs.
Look for:
Clear separation between personal and business expenses
Proper tracking of income streams, assets, loans, and owner draws
Categories that align with how your CPA prepares your return
A well-structured chart of accounts makes tax prep faster, cleaner, and more accurate.
3. Payroll and Contractor Payments: Avoid Penalties
Whether you have employees or hire freelancers, this area requires precision.
Make sure:
W-2s and 1099s are filed correctly and on time
Payroll entries match tax filings and bank withdrawals
Contractor payments are properly categorized and tracked
Errors here can lead to IRS notices or missed deductions—neither of which you want because they may lead to tax penalties and fines.
4. Sales Tax and Nexus: Stay Ahead of the Curve
Sales tax compliance is more complex than ever, especially for online sellers.
Ask:
Are you collecting and remitting sales tax in all applicable states?
Are your filings reconciled with your sales records?
Have you triggered “nexus” in new jurisdictions?
Sales tax isn’t just about collecting—it’s about knowing where and when you’re responsible.
5. Year-End Adjustments: The Tax Lens
Before your books go to your CPA, they should be reviewed for:
Depreciation entries
Loan interest allocations
Owner equity adjustments
Accruals or deferrals that affect tax timing
These adjustments aren’t always visible in day-to-day bookkeeping—but they’re essential for accurate tax reporting.
The Value of Bookkeeping and Tax Synergy
When bookkeeping and tax strategy work together, you get:
Fewer surprises at tax time
Cleaner, more accurate financials
Better decisions based on real data
Confidence that you’re compliant and audit-ready
At Virtually DAWN, we specialize in guiding business owners through this dualistic approach. We don’t just “do the books”—we help you build a financial system that supports your goals, protects your business, and sets you up for long-term success.
Confirm that Your Books Are Tax-Prep Safe!
Let’s connect. I’ll walk you through a simple assessment and show you how professional bookkeeping and tax strategy can work together to elevate your business.