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We are always doubtful about handing over our work to someone else which happens for many reasons, ability, deadlines, accuracy, quality, etc. Thus, small entrepreneurs are often very skeptical about outsourcing their tax preparation services.

Today’s blog is all about busting the myths that you may have heard about outsourcing taxation work:

1) Loss of control over finances: Many CPA firms feel that outsourcing tax preparation will result in loss of control. However, that may not be the case. There are a process and a system that is built around tax preparation which will ensure adequate control. If you follow the process diligently, there will be no loss of control.

2) Information security: There are various security measures in place that your outsourcing partner would take to maintain the highest level of security for your information. Yes, there is always a risk in everything; even the in-house tax preparation isn’t safe! But you can always ensure maximum security at your end.

3) Only for large firms: It’s a common misconception that outsourcing for tax preparation works only for large firms. That is not the case, in-fact large firms can afford to do it in-house. However, they too gain by outsourcing.

In fact, outsourcing for tax preparation works better for small and medium-sized enterprises. It ensures the following benefits-

steady availability of skilled resources

savings in overhead and other infra costs

more time for business expansion

The term bank reconciliation might be known to you if you are involved in accounting or knowledgeable about the matter. BRS is prepared on a periodical basis to check bank related transactions are recorded properly in cash book’s bank column and by the bank in their books or not. While doing the bank account reconciliation process, one must scan the bank statement and check if the account of your company or personal accounts has the same data. UPI transactions tend to be forgotten and are not displayed in most people’s accounts which creates a difference with the bank statement. Frequent errors like this should be noted and solved beforehand.

It is easier to figure out about mismatches and glitches in accounting if bank account reconciliation is done. This makes sure that everything is transparent and clear contributing to an accurate financial statement.

The top 5 needs and importance of the bank reconciliation statement are summarized below in points.

1. Ensure accuracy of cash and entries:

To be certain about the amount of cash reported on the company’s balance sheet is the correct. The additions and deductions on the bank statement are reconciled with the items that are entered in the company’s general ledger cash account. It’s easy to forget to enter an expense or a payment when you’re in a rush, so cross-checking against the account statement can be a good safety net for your own books.

2. Detect errors or omissions:

Any omission or error in the company’s general ledger cash account also means that other general ledger account will have a corresponding omission or error. These mistakes include errors such as addition and subtraction, missed payments and double payments. The bank reconciliation could prevent this type of company from issuing an incorrect balance sheet and an incorrect income statement.

3. Improve internal control over the company’s cash:

Internal control over the company’s cash can be improved If bank reconciliation is done by someone other than the employees handling or recording receipts and payments. You can also reduce the dishonest acts (involves company’s cash) of employees.

4. Tracking Receivables:

Payments due for one month might not appear on your bank statement until the next month, if you receive the payments near the end of the month. BRS helps you to track the individual invoice till the payment is received against it. Thus, at any point, you can easily track the bills pending instead of just knowing the overall outstanding of a customer.

5. Catch fraud and cash manipulators:

It is suggested to have an independent party perform your reconciliations to prevent fraudulent in Future. Bank reconciliations statement also helps you in catching employees from stealing your money.

Conclusion

Filing taxes is something that no one likes to do especially, if you owe a lot of money in the form of taxes. This can lead to procrastinating the whole process of filing taxes. But this is not at all advisable, as this can lead to more problems and confusion. Firstly, it is essential to understand filing taxes and paying them are two different things and the procedures are different for each of them. This article will throw some light on why it is essential to file your taxes before the due date. 1. Avoid the penalty prices: Keep in mind that there are heavy penalties you will have to pay if you are late in filing taxes. This grows over the years if you are irregular in submitting your taxes.

2. Avoid the last-minute rush: Planning and organizing all your records including receipts, tax slips, notice of assessment etc. beforehand will help in carrying out the process of tax filing smoothly. This will ensure that you have succeeded in including everything required and nothing has been overlooked.

3. Keep scammers away: Tax identity theft is a big problem. Tax refund theft generally starts by accessing someone’s personal information, then filing a fake tax return under the person’s name to pocket the refund. Keep criminals’ grubby hands off from your refund by filing your tax return as soon as you are ready with your forms and other paperwork.

4. Consult a professional before due date to avoid miscalculations: If you are someone whose life revolves around accounts, money and transactions, it is wise to consult an expert in the taxes department to help you sort out your documents and the whole process. It might help in saving money and in avoiding miscalculations.

5. Avoid tax extension: Filing your tax return early may help eliminate the need to file an extension. Some people who wait until the last minute to file their returns need time to look for additional deductions or gather receipts. It will be even worse, if you file an extension but don’t pay what you owe, the department will charge you interest and penalties on the outstanding tax debt until it is paid fully. Preparing your tax return early in the year helps you avoid this situation.