Tax Accounting: what is it and what are its objectives?

The expression "Fiscal Accounting", also known as tax, It is usually used to designate the accounting of events that generate tax and fiscal obligations.

In the first place, tax accounting is the sector responsible for the financial operations of the company and, when they are well structured, increase business productivity, regardless of the field of activity, avoiding penalties and fines.

Those who work in the financial area of ​​companies need to understand a series of tax obligations, fees, among other important processes.

What is contability?

Accounting is both a science (as it produces systematic knowledge that can be verified) and a technique (allows to process and apply data) that provides useful information when making decisions economic. Its object of study is equity, the analysis of which is reflected in the so-called financial results (or financial statements).

Tax (from the Latin fiscālis), on the other hand, refers to what belongs to or is related to the tributary and tributary authorities. This term is related to the public treasury or to the set of public bodies in charge of collecting taxes.

The information system related to tax obligations is known as tax accounting. This type of accounting is based on the tax regulations established by the law of each country and includes the recording of transactions for filing returns and paying taxes.

Tax accounting

Is he area in charge of carrying out activities to comply with legal obligationss, as well as to carry out high-level bureaucratic processes with the control bodies. It is the employees of this sector who will reconcile the generation of taxes of an organization, adopting registration procedures, bookkeeping, issuance of all events that generate fees or obligations tributary.

Tax accounting may differ from financial accounting (which records the activities and transactions of a company for a specified period). In some countries, accounting laws require reporting every twelve months, resulting in a new fiscal year.

For example, if reports are due on July 1, the fiscal year runs from that date to June 30 of the following year. This difference from the usual calendar means that there are different types of accounting information in a company. For example, a business may have made $ 1 million in 2020 from its operations, but lost $ 2 million in the fiscal year that began on the same date.

goals

The purpose of tax accounting is accurately determine the financial result of the fiscal year, demonstrating it clearly and synthetically, to later meet extra-accounting requirements.

Knowledge of the objectives of tax accounting is essential for the accountant, since only then may develop the procedures to be adopted by the accounting team to achieve the goals and objectives marked.

The main objectives of accounting can be listed as follows:

• Accurately determine the taxable income - or taxable income - of a given fiscal year, based on the relevant legislation, for the calculation and formation of accounting provisions for the payment of taxes levied on the utility of the entity.
• The accounting record of provisions related to taxes receivable, in compliance with the Fundamental Accounting Principles, as an integral part of the company's information system, Tax Accounting has the responsibility to report, in a correct and timely manner, the value of the different provisions for the payment of taxes, in accordance with the accrual accounting principle The exercise.
• Bookkeeping of tax documents in proper tax books or auxiliary records, to determine and determine the amount of taxes to be collected within the period after the end of the calculation period.
• Completion of payment vouchers, informing the Financial Sector and Accounts Payable of the entity about the amount and payment terms, in addition to issuing and order the delivery to the respective competent bodies of the forms established by the legislation relevant.
• Tax guidance for all units of the company (branches, factories, departments) or associated and controlled companies. The correct fiscal and fiscal orientation of other units or companies can represent relevant fiscal savings. Example: the factory's place of installation, or even the place of origin of certain raw materials, may mean a lower tax burden.
• Orientation, training and supervision constant of the employees of the tax sector.

Importance

Regardless of the segment in which the company operates, it is necessary to meet various legal requirements related to taxes and changes in legislation. Efficient accounting management complies with legal obligations, allowing the company to anticipate them.

The activities of the tax area are essential for decision-making, as they guarantee the figures used in strategic business decisions. Although its performance is associated only with the fulfillment of these obligations, tax accounting plays a prominent role in the proper development of the company's activities, since it ensures compliance with the law.

The performance of this sector focuses on cost reduction, agility and organization of processes, capable of generating useful data for corporate management. The transfer of tax information is carried out through documents such as reports, graphs, worksheets, calculation, among other data to facilitate decision-making, ensuring the financial health of the deal.

What are the benefits?

To strengthen the role of tax accounting, let's analyze the benefits of its activities:

• Allows compliance with tax obligations, in order to create a good relationship with the tax authorities and reduce inspection problems.
• Avoid tax penalties, which can lead to unwanted fines.
• Allows you to analyze incorrectly applied tax problems.
• It allows you to generate useful information that can be used by managers in different areas.
• It provides greater agility to processes (internal and external), ensuring, for example, the circulation of goods sold by the company.
• It optimizes and allows to forecast cash flow, allowing the company to anticipate the payment of taxes and contributions.
• PIt allows to anticipate the fulfillment of ancillary obligations, being able to correct problems and benefit from better conditions of the organs of control of organs.