Governmental organizations usually impose some charges to individuals and legal entities referred to as tax with an aim of funding public expenditure. Individuals or entities that evade, resist or fail to pay their tax are likely to be punished by the law. The government imposes the taxes either directly or indirectly and can be paid using money or providing equivalent labor. Proper record keeping for all financial transactions help in ensuring there is an easy time when filing tax returns since all the records are clear. Bookkeeping will, therefore, ensure that all daily financial transactions are recorded.
Bookkeeping is one of the business accounting processes which involves keeping records of all day to day financial transactions in an organization, business or institution. There are various transactions that are involved in bookkeeping including purchases, sales, payments and receipts which can be cash or credit transactions. The single-entry bookkeeping system and the double-entry bookkeeping system are the two major systems used in businesses and organizations in bookkeeping. Incomes and expenses in a busineses or organizations are recorded in one accoung in the single-entry bookkeeping system. A double entry bookkeeping system usually has at least two accounts where financial transactions are recorded such as liabilities, assets, expenses and revenue account. Bookkeeping can be computerized hence reducing the paper work and also ensuring accuracy in the various entries for financial transactions in a businesses or organization.
There are various types of taxes an individual is required to pay depending on one’s income, property, goods and services and many other types. An example of tax imposed depending on one’s property is the estate tax. Tax imposed on individuals who inherit property from deceased persons is known as the estate tax. The tax is usually levied if the value of the property that has been left behind for the heir exceeds the limit set by the law in a given state. Estate tax preparation depends limit set for the estate tax and also the procedure to be followed in filling the estate tax if the maximum limit set have been exceeded.
Enrolled agents who have knowledge and are qualified in tax law can help in estate tax preparation. Their main helps in the estate tax preparation is to ensure compliance to the law by the individual while ensuring the estate tax charged is minimized. Enrolled agents are required to have knowledge in accounting practices since tax obligations for estate tax can be presented in financial statements. Opinions that do not present the actual financial situation can arise when enrolled agents perform accounting and audit tasks hence are restricted.