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How New Tax & Accounting Changes Affect U.S. Financial Statements

Accounting | By Andrew Smith | 2024-09-14 10:04:45

How New Tax & Accounting Changes Affect U.S. Financial Statements

New tax and accounting laws have much influence on the management and reporting of the financial statements of business entities in the U.S. Compliance, from updated tax deductions to new accounting standards, is non-negotiable. Business owners and accountants have to be completely aware of changes like this to make sure that all financial reporting is presented correctly. The proper approach will help a company maintain its compliance status while finding cost-saving opportunities. The following article describes how the new tax and accounting changes will affect U.S. financial statements and how outsourced tax preparation services can simplify the process.

What Are the Key Tax & Accounting Changes?

The most recent tax and accounting changes have several updates that U.S. businesses should be considering, including:

Tax Deduction Adjustments

The Tax Cuts and Jobs Act included major overhauls in business deductions, including limits on interest expense and meal deductions.

Revenue Recognition Rules

The updated accounting standards changed how revenue was recognized. This means the recording of contracts on financial statements changes.

Changes in Lease Accounting

ASC 842 requires businesses to record most leases on their books, reflecting assets and liabilities.

Employee Benefits Changes

The tax law changes amended the deductive amount for various employee benefit provisions. These include health care and retirement contributions.

Deferred Tax Liabilities

New tax rates have made the business reassess its deferred tax liabilities, thereby affecting the accuracy of financial statements.


The following changes also require a critical review of the financial statements to avoid penalties and interest charges for non-compliance.

Why Should Tax Preparation Outsourcing Be So Important in 2024?

Outsourcing tax preparation can become a goldmine for U.S. businesses in handling these changes.

Expertise on Regulatory Changes

Outsourced firms are constantly updated about new regulations to make this company follow the updated tax laws as well as accounting standards.

Time-saving Solution

The updates of taxes and accounting adjustments take a lot of time. In its place, outsourcing, it would mean that a business can pay more attention to its growth while the actual work is being carried out by outsiders.

Cost-effective

Through outsourcing, a business firm receives top-rated outsourced accounting services, usually at a lesser cost than hiring an in-house team.

Minimum Errors

Those professions that outsource the services of tax preparation reduce the occurrence of errors; hence, the reporting is accurate to avoid penalties.

How Does Accounting Change Affect Financial Statements?

Accounting changes directly affect many aspects of an entity's financial statements either way. How? Let's see:

Revenue

With the new recognition guidance on revenues, entities shall adapt the way they recognize revenues. Since contracts are accounted for differently, revenue presentation changes accordingly.

Liabilities

Account lease changes require that businesses put more lease obligations on the balance sheet, which inflates liabilities.

Expenses

New rules concerning employee benefits and deductions affect the accounting of such expenses, which can alter net income levels.

Assets

Tax changes may also influence the valuation of assets, notably deferred tax assets, which need recalculation under new tax rates.

Equity

When considering all these changes together, they affect the shareholders' equity and can alter how businesses attract and retain investors.

One can easily adjust to such changes with a little help from outsourced tax preparation services.

Benefits of Outsourced Tax Preparation

There are several ways in which U.S. businesses benefit from partnering with the best outsourced accounting services:

Expert Guidance

The outsourcing firms offer access to the best accounting and tax professionals who are pretty knowledgeable about U.S. regulations.

New Rule Compliances

Outsourcing ensures that businesses comply with the new set of rules and regulations to avoid any form of fines imposed because of non-compliance. The changes in tax law are overwhelming, yet outsourcing helps in this area.

Scalability

Growing businesses imply a complexity in tax and accounting needs. Scalability offers flexibility in outsourced services to meet these growing needs.

Improved Accuracy

There is improved accuracy in financial statements since there is minimal opportunity for human error in the accounting and tax outsourced services.

Risk Management

The risk of being non-compliant is reduced since outsourcing keeps up with changes in tax law and financial reporting standards.

How Does Your U.S. Business Get Ready for Any Future Tax & Accounting Changes?

Planning requires keeping your head on a swivel in the wake of changes coming year after year. Here are just a couple ofstrategies:

Review Financial Statements Regularly

Regular review of financial statements ensures that new tax and accounting rules are correctly applied.

Use Outsourced Services

Working with outsourced service professionals who can prepare taxes eases compliance and will keep your business well-prepared for any future changes.

Stay Informed

Keep up with current changes in tax and accounting regulations to stay ahead of compliance.

Invest in Technology

Accounting software updated to new standards can help businesses manage their books efficiently.

Conclusion

Changes in tax and accounting regulations have a direct impact on how the financial statements are managed in American businesses. New standards related to revenue recognition, accounting for leases, and tax deductions require one's attention continuously. Engaging professional services for outsourcing tax preparation helps a business enterprise sail through such changes smoothly. In addition, outsourcing guarantees compliance, accuracy, and saving of precious time and cost by the business owner for better utilization in the growth of the business. The best way to maintain compliance with such regulatory changes is through awareness and by availing of professional services.


Fino Partners provides professional outsourced tax preparation and accounting services to help U.S. businesses stay compliant, save time, and reduce costs.

Frequently Asked Questions (FAQs)

Tax changes affect financial statements reporting on income, expenses, and liabilities, which businesses must change to report income, expenses, and liabilities.

It saves money as outsourcing provides expert guidance, and assurance of compliance, saves lots of time, and has minimal errors.

Lease accounting changes make businesses record most of the leases as liabilities on the balance sheet and, hence impact it significantly.

Yes, it saves money as outsourcing costs are generally lower when compared to maintaining an in-house accounting staff, and further skilled services can be provided with fewer dollars. The financial statements are to be reviewed periodically by the business enterprise, outsourcing of tax preparation services is warranted, and updated accounting technologies are to be invested in.

Aishwarya-Agrawal

Andrew Smith

Andrew Smith is an experienced content writer with a strong focus on various financial niches including VCFO services, accounting, and bookkeeping. He has worked on multiple articles and papers on financial management and corporate finance, published in esteemed journals. Ankit's expertise and dedication to delivering precise and insightful content make him a trusted voice in the finance and accounting sector.

Why Choose The Fino Partners?

With Fino partners you get more than just accounting and bookkeeping in the USA. You get an accurate, clear process that makes you satisfied. We made money management easy so you can grow your business instead. The advantages of utilising Fino partners for accounting outsourcing USA are:

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