Tax Accounting: Definition,
Types, vs. Financial
Accounting
What Is Tax Accounting?
Tax accounting refers to a method of
accounting that is used to prepare tax returns
for individuals, corporations, and other
organizational entities. Tax accounting is
governed by the Internal Revenue Code and
tracks funds coming in and going out.
Tax Accounting Principles vs.
Financial Accounting (GAAP)
There are two sets of accounting principles in
the USA: tax accounting principles and
financial accounting principles. The second one
is also called generally accepted accounting
principles (GAAP), and under it, companies
must follow a common set of accounting
principles, standards, and procedures.

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Types of Tax Accounting
For an individual taxpayer, an accountant in
West Los Angeles focuses solely on items like
income, qualifying deductions, investment
gains or losses, and other transactions that
affect the individual’s tax burden. General
accounting, on the other hand, involves
tracking all funds coming in and out of the
person’s possession regardless of purpose.
What Is the Main Purpose
of Tax Accounting?
The work of a professional accountant in West
Los Angeles is to make proper tax calculations
and prepare tax documents for individuals and
organizational entities in time for tax filing
season.
What Is the Difference
Between a Tax Accountant and
a Management Accountant?
Tax accountants simply help businesses and
individuals comply with taxation
requirements. A management accountant is
just an internal party who cannot work with
external clients. Management accountants
assist their own companies with the financial
implications of business decisions and provide
strategic advice.

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