Do You Need to Prepare Taxes to Have a Successful Bookkeeping Business?Oct 04, 2021
In this episode of Profits + Prosecco Podcast, I am going to be talking about having a successful bookkeeping business without having all the knowledge in the world about taxes. A common belief I hear from people thinking of starting bookkeeping is that they need to do both bookkeeping and taxes in order to be successful, but that's not the case. Stay tuned to find out why!
But before we dive right in, welcome to the Profits + Prosecco Podcast! I’m your host, Katie Ferro, CPA, reformed rule follower, creator of Booked Out Bookkeeper, mom to 3 little ones, and Kajabi enthusiast.
This podcast is for entrepreneurs who desire to change their life through their profitable business, and for bookkeepers and accountants who want to escape the 9-5 and start a simple scalable bookkeeping business like I did.
Bookkeeping increases profits and profits change lives. So pop some bubbles and let me show you how!
In this episode, you'll learn why being a successful bookkeeper does not need to involve the ability to do taxes. For even more juicy details, listen to ALL of episode 47 of the Profits + Prosecco Podcast on your fave streaming platform.
The truth about taxes and bookkeeping.
As a bookkeeper, taxes do not have to be prepared by you, BUT good bookkeepers must keep taxes in mind. A bookkeeper should know just enough that they can have competent conversations with their clients and the tax preparer.
Bookkeeping and tax require two very different thought processes and two different timeframes for doing the work. Bookkeeping is important in making business decisions and analyzing profits, while taxes just need a good set of accurate books in order to plan correctly.
Here’s the thing… Bookkeeping deadlines are continuous but tax deadlines come in very strong, overwhelming waves.
Being a good tax advocate for your client involves:
- Staying aware of the ever-changing laws.
- Listening to conversations about possible changes.
- Researching and sitting on hold with the IRS.
So think about it. Imagine doing both bookkeeping and taxes. What if you're so busy focusing on the bookkeeping aspects that you miss a tax deadline? One little mistake, and you cost your clients a few thousand dollars in overpaid taxes or penalties. This is EXACTLY why bookkeeping and taxes should be kept separately for the most part.
The importance of focusing on one task.
Being separate as a bookkeeper or tax preparer allows both teams to focus on their deadlines and clients. It provides TWO sets of eyes to catch mistakes, because guess what? We're all human!
This makes it possible to maintain a good set of books so that the tax experts can simply take their look and do their planning without adding hours of data entry or research. And the separation of duties is going to 100% benefit you and the client. The more you focus on taxes, the less you focus on bookkeeping and vice versa.
All of this and way more is covered in my program Become A Bookkeeper. In case you missed it, I highly recommend checking out episode 46 for more information on why this program truly shows you how to play the role of the bookkeeper.
Do You Need to Prepare Taxes to Have a Successful Bookkeeping Business?: The Bottomline
I hope this episode helps understand that you don't need to be an expert in taxes to have a successful bookkeeping business. You can be a successful bookkeeper JUST by focusing on bookkeeping. Because in the end, it’s best taxes are kept separate. It all comes down to knowing enough to be competent in the industry and trusting what the best decision for your client is.
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Don’t forget to take a screenshot, share it in your Instagram stories, and tag me at @orderlyaccountingbykatie. Cheers to your inevitable success and I’ll see you in the next episode!