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Internal Auditing Explained

Internal auditing is one of the most important services you can find from tax specialists. San Diego businesses often don’t understand how important this service is or could be for them though.

Both public corporations and private companies can avail themselves of internal auditing in order to ensure legal and regulatory compliance, reduce risk and keep the inner workings of the company in check.

This will allow you to maintain a high level of financial integrity and profitability. Here are the most important facts you need to know and a range of the services you may find when it comes to internal auditing.

tax audit
tax audit

What is an Internal Auditing?

An internal auditor, whether they work independently or under the roof of a larger firm, will provide an objective point of view to ensure that your company’s operations and organization are running smoothly and profitably.

Their job is to help you achieve your financial and organizational goals through a system of discipline, structure, evaluation, analysis, assessment, and advice.

Their services are generally related to the processes of control, governance and risk management. The goal of this process is to improve the efficiency and effectiveness of an organization, with added value along the way.

What Services are Available?

An internal auditor will work with a variety of clients, both public and private companies and organizations, of all shapes and sizes, including nonprofits. They should have an extensive amount of knowledge about financial, legal and tax-related subjects and in most cases, they come with the resources of a larger accounting firm.

They may be able to assist any internal auditing departments you have in place, in order to ensure an unbiased opinion, or provide the sole internal auditing services for any special project you need to accomplish.

Services such as risk assessment, internal auditing development and management and the execution of internal auditing plans are common types of services available from this type of tax professional.

And as long as they are not part of a public accounting firm, the internal auditing services they should be able to provide will be virtually unlimited.

These are a few of the most common internal auditing services available today:

  • Audit committee advisory services
  • Continuous auditing
  • Construction audits
  • Corporate governance advisory services
  • Fraud and forensic audits
  • Internal audit planning and development
  • Regulatory compliance audits
  • Risk assessments

When it comes to tax specialists, San Diego has many firms to choose from, but they don’t all offer these services. If you are thinking of adding this important service, make sure to find a firm that has experienced and knowledgeable professionals specializing in internal audits, check their references and be certain they are able to provide the specific services you need. You’ll be glad you did.

Types Of Taxes Affecting The Consumers

Tax is the most important source of government returns. Taxes are dues compensated by the general public to central, state, and local administration. The amount of wealth collected by means of taxes assist in financial support for services offered by the government.

A tax levied on a particular item increases the selling price of the item, making it effectively a costly buy. On the other hand, if customers purchase a smaller amount, forcing the price to lower down, at that time the tax has an effect on sellers, who obtain a reduced price for their goods. Either the buyer or seller bears the maximum allocation of tax trouble, based on the theory of demand, supply, and elasticity.

Different Types of Taxes

There are various types of taxes paid by individuals as well as businessmen. Some of the taxes are stated are as follows:

Everyone has to pay Income Tax: Income tax is the most important kind of tax paid to a central government and in several circumstances to the state and local governments. The capital attained through salary, self-employment, and the deal of property is known as “Taxable income”.

A major chunk of the population disburses their taxes by having the wealth withdrawn from their paychecks. The percentage of income tax an entity has to pay will depend according to its earnings. The percentage rates of levied are lower for those who usually earn lesser money.

Pay it or don’t buy the goods – Sales Tax: Sales taxes are generally paid to the state or local government and generally added to the retailing price of certain goods. These types of taxes are based on the cost price of items and help in funding for services given by the government at the state or local level, like roads, firefighters and police.

Property Taxes – the inseparable part of cost: Property tax is remunerated by any person who possesses a property such as land, a residence or profitable real estate. These taxes are regularly collected by the central and state government to facilitate financing their resources. Property taxes are reasonably rigid.

Companies have to bear with Corporate Tax: All business enterprises pay money on the earnings made from their concerned business. Tax penalties are significant when composing a business. This type of tax usually requires the employment of an expert to outline the complex tax necessities.

Pay a tax on the services with Payroll Tax: Payroll taxes are withdrawn by businessmen, prior to the time of releasing the compensation to the person for the amount of labor completed. Business organizations are required to match a definite amount of its payroll taxes. It has to be compensated by the individual service provider if the normal business is not able to pay them.

Implication of Taxes

Taxes and duties alter market results, thus having an immense effect on the trading of particular goods and services. It even alters the charges that buyers’ give and sellers’ obtain for their products. Taxes as well as influence incentives to labor, earn and invest.

Eventually, taxes have an effect on human resources and the community as a whole. A higher amount of tax rate may dishearten big business organizations from investing extra, increasing their businesses and creating employment.

3 Steps to Finding The Right Tax Consultant

Some people are perfectly comfortable doing their own tax returns, but if you would rather leave it to a qualified professional then you may be wondering how to go about finding the right tax consultant for your needs.

Filing your tax has to be done accurately to avoid complications further down the road, so if you are going down the route of hiring professional help finding a competent tax consultant is of great importance.

As with most things in business, taking the time to do your homework is the best way to ensure you get the results you want. The Internal Revenue Service holds you responsible for all the information entered in your tax files so it is advisable to always use an experienced and reputable consultant.

The following are 3 steps you can follow as a guide to finding the right Tax Consultant for your tax requirements.

Evaluate your needs

Depending on your level of competency with filing your tax returns you will either need assistance from a certified financial planner or a certified public accountant. A financial planner is qualified to provide basic tax assistance while a public accountant will offer the same services in more depth.

In terms of training, qualifications, and tax state licensing requirements, certified public accountants are required to undergo more rigorous tests to qualify.

These requirements are designed to assure you of the authenticity of certified consultants and are therefore a good barometer by which to make your choice in relation to the value and importance of your tax returns.

Do your research!

From talking to work colleagues and family and interviewing a handful of potential tax consulting services, putting in the legwork will assure you of finding a good consultant that will suit your needs and your budget.

Find out more about the consultant’s experience, as well as their rates and how they manage sensitive information. You can also ask for references and testimonials from previous clients as well as finding out what professional bodies the consultant is affiliated to.

Trust, but verify

Your research will provide you with a wealth of information that will help you make an informed decision for the best of your US tax interests. The consultants that stand out during your canvassing are the ones you will need to concentrate on to find the suitable fit both financially, and professionally.

Verify that your chosen professional tax consultant will carry out all work diligently, offer honest and legal advice, and have your best interests at heart at all times.

Conclusion

Availing of the expertise and experience of a qualified tax professional is a worthwhile investment when it comes to filing your taxes. They have the expertise and knowledge to handle all your tax issues giving you a stress-free solution that complies with the many various tax codes that need to be observed.

Putting in some thorough background work will mean that you get a competent professional that may very well turn out to be the best decision that you’ve ever made regarding your finances.

How to Stay on the IRS’s Good Side

So you’ve just found a C corporation.  Congratulations!

You may already know that, unlike most other business structures, C corporations are taxable entities.  Because a C corporation is considered to be a separate entity from its shareholders, it files and pays its own corporate income taxes.  The income left over after business expenses cannot be passed along to its founder(s).

Most C corporation founders, especially rookie ones, usually find themselves hopelessly confused when tax season rolls around.  Who can blame them?  C corporations are a lot more complicated than other business structures, especially when the IRS is involved.

If you have a C corporation, and if you hyperventilate every time you see Uncle Sam’s face, don’t worry!  This article covers the basics of filing personal income taxes as a C corporation founder, so you won’t have to run for cover if the IRS comes a-knockin’.

First of all, you have to know that, with C corporations, business expenses and personal expenses don’t mix.  Unlike LLC and S corporation owners, C corporation founders cannot report the profits and losses of their business on their personal tax returns.

Instead, they have to file their personal income taxes separately, usually as an employee of the company.  So, the first thing you want to do is to keep the company’s finances separate from your own personal finances.  If you haven’t already, start doing it as soon as possible.

On top of that, keep track of everything you personally purchase for your business, even if it cost less than $50.  Be sure to file all of the receipts and documentation as you accumulate them.  You can also record all your business-related personal transactions in a logbook to make your accountant’s life easier when tax time rolls around.

You might be asking, “Why to go through the trouble to save all that stuff?”  Well, here’s some good news: you’re allowed to deduct all unreimbursed business expenses from your personal income taxes!  Reasonable business expenses, that is.

You cannot book a private jet to Hawaii for a business lunch and expect the IRS to reimburse you for that.  When it’s time to file your income taxes, be sure to deduct all unreimbursed business expenses.  There are two ways you could do this.

One way is to have the IRS reimburse you, although they might find a reason not to pay you back the full amount.  The second way is somewhat riskier, but doable if you follow the rules: have the business reimburse you, and then make the business deduct the expenses from its taxes.

It is highly recommended that you do your research on what you’re allowed to deduct.  If you go crazy and start deducting your cat’s kibble as a business expense, you bet the IRS will come sniffing around.  A good place to start is this guide on which business expenses you SHOULDN’T deduct from your taxes.

Last, but definitely not least, you should always talk to a certified public accountant.  It’s always worth the extra time and money.  These people know their stuff, and they were put on this earth to ensure that you handle your taxes correctly.

Not only can a certified public accountant help you with accounting, auditing, and preparing your taxes, s/he can also act as a business finance consultant.

Preparation is key.  It’s never too early to start preparing your taxes, so it might be a good idea to do as much research as possible, ask questions, and organize all your business-related expenses as soon as possible.  You’ll thank yourself next April!

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