The Essential Role of Bookkeeping in Tax Preparation

What is the role of bookkeeping in tax preparation? Honestly, it is the foundation of a good tax plan. If we don't know what the numbers are in the business, or if we don't have our expenses properly classified, the likelihood of us missing tax opportunities are huge. So without having those foundational numbers that are accurate and categorized in the right way, opportunities will be lost and will impact the taxes that we have to pay. So for me, as a tax advisor, as a cpa, one of my greatest pieces of advice for every business is to make sure you have a bookkeeper that keeps your information up to date and that it's accurate. Because if it's not accurate, we can't then rely on it to make good, informed business decisions, which may be part of our tax strategy as well. So if we have bad data, the decisions we make are going to be maybe not the right outcomes because we're doing so based on bad information. So bookkeeping is the foundation. At the same token, if you ever get reviewed by the IRS or the Canada Revenue Agency, what you need to do is have good bookkeeping records, because that will support any claim that the tax team makes to ensure you're paying the least amount of tax legally possible.