To put it simply, accounting is the tracking and reviewing of financial data. Accountants usually have a bachelor’s degree in a relevant subject area, such as accounting, finance, or business administration. A master’s degree may be required for some positions, and Certified Public Accountants (CPAs) must have relevant work experience and pass the four-part CPA exam. CPAs enjoy more career opportunities and higher salaries.
Qualified accountants with experience may advance and become finance managers or executives. They can also try to become a company secretary. As of July 2020, accountants earned an average annual salary of $77,020 in the United States. Accountants can also specialize by focusing on a particular area. Here are five of the main types of accountants.
1. Tax Accounting
Tax accountants are required to know federal, state, and local tax laws. They gather relevant financial information from their clients and insert the data into the relevant tax forms. They may also question their clients to determine if they are eligible for specific tax breaks. For example, someone who has children may be able to claim them as dependents when filing taxes, or a client who works from home may be able to claim part of their rent and household expenses as business costs. Tax accountants specialize in ensuring their clients comply with applicable tax laws while using relevant information to reduce their amount of taxes owed. They may also advise clients about actions, such as donating to charity or investing in an IRA, that can reduce their taxes.
2. Payroll Accounting
Payroll accountants work for companies and handle financial matters related to employees. They calculate the amount of pay each employee is owed for each pay period and issue payments. They also determine the amount of taxes that should be withheld from the paychecks based on the data they have about each employee and their applicable deductions. Payroll accountants monitor staff vacation and sick time and deduct time when it’s used. These accountants also send tax money withheld from paychecks to the government on behalf of the employees.
Payroll accountants also prepare tax documents for employees. They prepare W2s and use W2 envelopes, such as those provided by Mines Press, to distribute these tax forms to employees per federal, state, and local laws. They are also required to provide copies of W2s to the Internal Revenue Service (IRS). Envelopes produced by Mines Press are a popular option for companies looking to personalize the envelopes they use to mail an important tax document or other sensitive information to employees. They have lots of affordable options like W2 double window envelopes with a security tint and work with many kinds of software to create a seamless personalization experience.
Auditors collect financial data from a company and assess it. They gather all relevant financial information, including payroll reports, expense reports, income statements, tax documents, and bank balances. Their objective is to ensure they can account for all the money the company should have. Internal auditors work for the companies they evaluate. These auditors also help their company develop strategies to prevent fraud.
External auditors work for outside organizations. For example, companies considering a merger may wish to perform an audit on the other company before finalizing their arrangements. They may use their auditor or hire an auditor to review the other company’s financial records to ensure the financial data that’s been shared with them is accurate.
4. Forensic Accounting
When people deceive others with the intent to profit personally or financially, they have committed fraud. Forensic accountants are accountants who specialize in reviewing all financial data related to a company’s activities. They’re trained to identify suspicious behavior and confirm whether or not money or assets are missing. They track missing money to determine where it has gone. Forensic accountants may work for companies, lawyers, or law enforcement agencies.
5. Management Accounting
Management accountants keep track of all of their company’s financial data. They prepare budgets that businesses use to project their annual operational costs. They also track the company’s actual expenses, identify cost overruns, and prepare financial documents for managers and stakeholders. They may also manage the company’s assets and determine the best way to invest company money to yield profits.