1. What is the difference between accounting and tax preparation?
Accounting and tax preparation are two closely related fields, but they have distinct roles in managing finances. Accounting focuses on tracking and recording financial transactions to provide an accurate picture of a company’s or individual’s financial health. It encompasses maintaining financial records, preparing financial statements, and ensuring compliance with accounting standards.
Tax preparation, on the other hand, deals specifically with complying with tax laws and regulations. It involves preparing tax returns, advising on tax planning strategies, and representing taxpayers in tax audits. While accounting provides the foundation for tax preparation, tax preparation focuses on the specific tax implications of financial activities.
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