If you've ever had to pay taxes, you know it's not as simple as pressing a button.
When it comes to businesses, this complexity multiplies.
This is where tax accountants come in! Using their knowledge and expertise, they guide individuals and businesses through the complicated world of tax.
The three main things you'll do in tax are:
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When you choose a specialization within tax, you can think about:
Each level of government raises money through taxation of its citizens. Each level of government makes its own decisions about how and what to tax ...
Although most federal revenue comes from income taxes, state and local revenues may come from transaction taxes, which are on the sale of goods and services; income taxes, which come from taxes on earned and unearned income; and property taxes, which come from taxes on property. – IRS
Most tax work falls under federal tax. Basically as long as you're not in International Tax or State & Local Tax, you're working on federal tax – whether you're in an M&A group, Business Tax group, or elsewhere – and you'd mainly help individuals or businesses prepare tax returns for the IRS.
Since a lot of your clients will be big companies with complex tax needs, you'll get to work with different groups within tax. For example, after you're done helping a client with their federal taxes, you might pass them on to your state & local tax team or to an international team for help with other taxes.
Since federal tax is very broad, you would usually specialize in an industry (e.g. real estate) or function (e.g. M&A). It's best to pick something you're interested in. For example:
If you're unsure, pick a firm that lets you rotate through different industries and functions so you get a taste of your options before committing.
When a company does business in more than one country, it has to follow the tax rules of each of those countries. This can get pretty complicated because every country has its own tax laws.
International tax experts help these companies figure out how much tax they need to pay in each country. They also help the company plan its business in a way that makes the most sense tax-wise, considering things like tariffs, trade agreements, and international tax treaties.
In international tax, you'd get to work with teams in other countries to meet clients' tax needs.
Think about how the sales tax you pay in one state might be different from what you'd pay in another state. State & local tax experts help businesses pay the right amount of tax in each place.
Because every state has different rules – and there are 50 states and plenty more jurisdictions at the local level – SALT can be a lot of work if you work with a business that operates in a lot of states.
SALT can also be tricky since certain rules that apply at the federal level may apply differently across states. For instance, a business might be allowed to reduce its income with a certain deduction when calculating federal taxes, but a specific state might not allow that deduction. Instead, they'd require the business to add it back to their income before figuring out their state taxes.
And since each state has its own rules (not to mention its own forms!), you'd need to research and understand these differences for accurate tax calculations.
When a company makes money, just like people, it has to pay a portion of its earnings as taxes. Business tax professionals help companies – from big to small, public to private – handle these taxes.
While both individuals and businesses must pay taxes, businesses have more complex tax situations since they do a lot of different things – they might sell products, provide services, have investments, pay employees, and maybe even work in different countries.
This complexity means there's a lot of demand for tax professionals who can navigate these intricate tax rules and help businesses comply with tax laws while strategically minimizing their tax burden.
For businesses, paying less taxes means more resources to reinvest in the business – whether it's in new technology, employee training, expanding operations, or exploring new markets. So business tax is all about figuring out how much tax these companies need to pay.
You may have also heard of the term corporate tax. Corporate tax professionals specifically help corporations (businesses that are legally incorporated) with their taxes.
Private tax is where you help individuals with their taxes – but not just anyone. It usually involves helping wealthier individuals or families with their taxes. Think: millionaires and billionaires who have a lot of investments, properties, businesses, and maybe even money in different countries.
Their tax situation can get complicated because they have more types of taxes to think about, like income tax, capital gains tax (that's the tax on money made from selling something like stocks or property), and inheritance tax.
Private tax is about helping these individuals manage their taxes in the smartest way possible, making sure they're following all the rules while also not paying more tax than they need to.
Private tax is a good path if you like the idea of getting to know your clients on a personal level. In private tax, you work closely with clients and their financial advisors, which allows you to build strong, direct relationships. On the other hand, business tax is often less personal because you're usually just requesting information from employees of a company.
Larger firms, such as the Big Four, tend to have more groups within tax that specialize in a function. This means that if you have a client with specific business needs (e.g. They're undergoing a merger or acquisition), they can rely on the expertise of a tax group that specializes in mergers and acquisitions for help.
At a smaller firm, you usually won't encounter these sorts of groups – you'd do research into M&A tax yourself and help them to the best of your abilities.
M&A's happen when two different companies join together or when one company buys out another company. They might do this for various reasons, like getting more resources or entering new markets.
Now, M&A's aren't just a simple handshake. There are a lot of tax rules companies need to think about. M&A tax professionals specialize in understanding these tax rules and helping companies figure out the best way to handle taxes during a merger or acquisition. They look at things like:
How to structure the deal: They advise on the best way to set up the M&A from a tax perspective. This might involve deciding whether the company should buy just the assets of another company or the entire company itself.
Understanding tax implications: They calculate how much tax the company will have to pay because of the M&A and find ways to minimize it legally.
Dealing with different tax laws: Sometimes, these deals involve companies in different countries, so tax professionals need to understand and work with different international tax laws.
So, M&A tax practice is like being a strategist for companies that are joining forces or buying each other. It's all about making sure that when these big business moves happen, the tax side of things is handled smartly and legally.
Unlike direct taxes (like income tax), which are paid directly to the government, indirect taxes are those that are added to the price of goods or services and paid to a middleman. For example, when you buy something, the price you pay includes a tax, which the seller then passes on to the government. The most common examples are sales tax and value-added tax (VAT).
Indirect tax professionals specialize in understanding and managing these kinds of taxes. They help businesses understand how much tax needs to be added to their products or services. They also ensure that the businesses are collecting and submitting these taxes correctly to the government. This is important because mistakes in collecting or submitting these taxes can lead to fines or legal issues for businesses.
Indirect tax can give you a good understanding of all a business's processes as you need to understand the taxes that need to be paid at each stage.
Transfer pricing refers to the price set for goods, services, intangibles, and capital transferred between one unit of an organization to units in different countries. – SunTec Group
Imagine a big company that has offices in different countries – say, a headquarters in Australia and a branch in Japan. Sometimes, these offices need to share things with each other, like products, services, or even just money. Transfer pricing is all about deciding how much one part of the company should charge another for these things.
Why does one part of the company need to charge another for goods or services? Well, when different parts of a company are located in different countries, they need to charge each other for goods or services so each part of the company can correctly report its income and expenses according to the tax laws where they are located. This helps ensure that the right amount of tax is paid in each country.
The tricky part is setting a fair price – a price that would be reasonable if the transaction were between unrelated companies. If the Australian office charges the Japanese office too little or too much for something, it could be seen as a way to avoid paying taxes (by shifting profits to countries with lower taxes, thereby avoiding higher taxes in their home country).
So tax professionals who specialize in transfer pricing make sure that when a company trades things between its different parts in different countries, it does so at fair prices that follow the tax rules.
In transfer pricing, you'd analyze a client's global and local supply chain, which is a good way to build your understanding of how businesses work. However, on the down side, you'd be in a very specialized role that may not give you as many exit options outside of firms like the Big Four.
You might wonder how transfer pricing and international tax are different. While both deal with international taxes, Transfer pricing focuses on the prices within the same company across borders, while international tax deals with how a company handles taxes in all the different countries it does business in.
Imagine you work at a big company, and every day, you have thousands of transactions rolling in – buying office supplies, paying for software, and maybe even splurging on some fancy new furniture.
Normally, sorting these into categories for tax purposes would be as fun as watching paint dry. But with machine learning, you train a computer to do this for you. It looks at details like who the supplier is, what the invoice says, and bingo! It categorizes everything automatically. What used to take days can now be done in hours or even minutes.
Helping clients like this automate and improve their tax processes through tech is what tax technology services are all about. If you're the kind of person who loves the idea of making things more streamlined with technology, this might be a good field for you. As a plus, there aren't busy seasons.
As a tax professional, you'll have a range of career paths you can take if you decide change gears. Here are some common exit options for those who've decided to go private or even expand beyond tax!
We hope this gives you a better idea of what it's like to be an auditor. And if you're still on the hunt for a promising opportunity, check out all the internships we have in this field!