Blog
March 18, 2022

Bookkeeping AND Tax Services Should Be Done By Your CPA

Many startup founders and small business owners hire a bookkeeper based on price and then have a CPA do their taxes to keep their costs down. Sometimes, they’re forced into having it done this way because their CPA firm either charges a lot for bookkeeping or doesn’t offer it as a service.

In both scenarios, the reason the firm won't provide bookkeeping services is that the firm hasn’t leveraged technology sufficiently enough to create margins equivalent to their tax services. So, they just don’t provide the service because they believe their time is more valuable on the tax side of the business. Under those circumstances, their decision is a logical one.

However, the reality is that progressive accounting firms have learned how to automate and streamline bookkeeping to make it profitable for them at a price point that makes sense for the client.

Why Does This Matter?

Books that are done by those charging the least are usually a dumpster fire. There’s no meaningful information on the financial statements, and transactions are miscategorized and often delivered to the client well after the end of the reporting period. Books that are done by a progressive CPA firm, however, tend to provide meaningful insight due to a creation of a custom-tailored chart of accounts, accuracy of reporting within the chart of accounts, and timeliness of delivery. It's a better deliverable because a more sophisticated professional is delivering it.

Maybe even more importantly, those books are the foundation of tax planning for entrepreneurs. If your CPA is doing tax planning for you, there isn’t a lot they can do if they don’t have timely access to the year-to-date financial statements of your business. This is because most business owners’ taxable income comes from their business, which is a result of most small businesses being organized as LLCs whether they are taxed as an S Corporation or Partnership. These entity types pass taxable income through to the members/shareholders (which is why they are called “flow-through” or “pass-through” entities).

So, at any point in time, the only way to know how much taxable income a business owner might have (beyond collecting their pay stubs, brokerage statements, etc.) is to have an intimate understanding of the taxable net income the entity has generated thus far. The point in all of this is that your books and taxes are not mutually exclusive. Rather, they are intricately and inextricably connected.

It’s Why We Do Both Bookkeeping and Taxes

For this reason, Dark Horse CPAs prefer to work with business clients for whom we handle all (or most) of their accounting needs as well as their tax returns and planning. Not to say that we won’t do just one side or the other, but we truly believe in bringing these services together as we’ve seen time and again the additional value-added due to the synergies of these services.

About Dark Horse CPAs

Dark Horse CPAs provides integrated tax, accounting, and CFO services to small businesses and individuals across the U.S. The firm was founded to save small businesses (and their owners) from subpar accounting and tax services and subpar client experiences. These small businesses are Dark Horses among their larger and more well-known competition. Being a Dark Horse CPA means advocating for small businesses by bringing them the tax strategies and accounting insights previously reserved for big business. Get a quote today.

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