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. Taxes imposed on an individual or legal entity may be direct or indirect which can be paid by offering labor equivalent of money. Recording all financial transactions by an individual or legal entity is important in ensuring efficiency while filing tax returns. Financial transactions taking place on a daily basis can be enhanced by using the bookkeeping process to record all the transaction.
There are various business accounts processes including bookkeeping which can be described as a process of recording financial transactions that take place in an organization, institution or business on day to day basis. Transactions in a business or organization can be so many that requires bookkeeping including purchases, sales, payments and receipts which can be cash or credit transactions. Book keeping in businesses and organizations is done through two major systems namely the single-entry bookkeeping system and double-entry bookkeeping system. Single entry bookkeeping system records financial transactions in a single account with only the incomes and expenses. 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 process has been made easier by replacing the tedious paper work with computer software which reduces the number of errors made when recording transactions in businesses and organizations.
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. Estate tax is an example of tax levied depending on one’s property. An individual who inherits property from a diseased person upon their death is likely to be charged some tax on the property referred to an estate tax. The law of a given state sets the limit of the value of an estate from which the heir or the beneficiary of the estate can have estate tax imposed on him or her. 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 agent usually make it easier for individuals during the estate tax preparation since they are highly knowledgeable in tax laws. Enrolled agents play key responsibilities in reducing the amount of estate tax charged on an heir for an estate and ensuring that the individual complies to the law. Knowledge in financial accounting practices in necessary since some estate tax information may be presented in financial statements. The accounting knowledge for enrolled agents is important although they are restricted in performing accounting tasks and audits since the may present an untrue opinion of the financial situation.