What is the difference between accounting and taxation?

Posted by Fed Finance Canada in Our employment advice
Posted at 01/12/2020
What is the difference between accounting and taxation?
There is a popular belief that accountants are experts in tax returns.

While this may be true in some cases, most accountants actually have much broader expertise that contributes to the success of all kinds of businesses, large and small. In fact, the tax experts are tax specialists.

So what's the difference between accounting and taxation?

Here is more information about these two disciplines and the specific roles of accountants and tax specialists.

What is accounting?

Accounting is a fairly broad discipline, but it is essential for a company's administration. It is a pillar of a company's decision-making process.

Accounting is a system for organizing and analyzing a company's financial data. It therefore provides a real-time overview of the evolution of a company's financial statements.

Good accounting management helps business leaders better understand their annual results and monthly balance sheets. It helps them define more accurate business objectives based on real data and determine the actions needed to achieve them.

Daily role of an accountant

Accountants are therefore responsible for processing data and information related to a company's financial operations to obtain an overview of its financial position. The accountant is then able to draw up budgets and set new objectives for the company.

The accountant also prepares the financial statements of the company for which they work. Financial statements are not only used to assist management in the decision-making process, they are also important for banks. Banks rely on a company's financial statements to determine how much money they can lend them.

Accountants are therefore the primary managers of a company's finances as a whole.

What is taxation?

Taxation is a sector that concerns everything related to tax authorities and tax laws, meaning the laws and regulations concerning different forms of taxation (taxes, levies, etc.).

Taxation is therefore a much more specific sector than accounting. While accounting encompasses all of a company's operations, taxation is more about creating strategies to help companies better complete their tax returns.

Taxation also concerns individuals who are required to file tax returns annually.

Since taxation is a fairly complex field, businesses should hire a tax specialist to fully understand their rights and duties.

Tasks of the tax specialist

Tax specialists, also known as tax accountants, are therefore specialists in income tax. They can work for companies or decide to deepen their knowledge of personal taxes.

When working for a company, the tax specialist's main role is to act as an intermediary between the company and the tax authorities. They need to have a comprehensive understanding of tax regulations and be aware of any changes to give their clients the best advice.

Tax specialists develop strategies for companies to help them pay less tax legally. For example, they can advise executives on the best legal structure to adopt according to their business objectives, or study the company's activities in order to better understand its tax issues.

You therefore need to have excellent knowledge of finance and tax laws to be a tax specialist.

Job opportunities in accounting and taxation

While Canada is experiencing some economic slowdown due to the COVID-19 pandemic, there are still many job opportunities in accounting and taxation.

Even if business activity slows down, companies still need the advice of accounting and tax experts. Especially in these difficult times, their expertise is probably more useful than ever.

So if you plan to apply for a taxation or accounting job, you have a good chance of getting one.

Start your career in accounting and taxation on the right foot

There are a few differences between accounting and taxation. Accounting is a discipline that focuses on the analysis of a company's finances as a whole, whereas taxation is specifically concerned with taxes.

Companies can therefore benefit from the services of both an accountant and a tax specialist, as their expertise complements each other and contributes to creating a stronger business strategy.

Looking to get a job in the field of accounting and taxation? At Fed Finance, we can help you find the best job for you based on your qualifications to help you start your career on the right foot.

Send us a spontaneous application today to take advantage of our recruiting services in the field of finance.