How does the hired team for Bookkeeping and Accounting Services work
This is possible and even advantageous as an owner if you get to know first the difference between accounting and bookkeeping.
It’s easy to operate and grow the business if there are teams who could get to see your financial standing, interpret your financial reports, and guide on what makes the business profit more. When there are financial tools and reports needed to be accomplished for your small business, these are too much to handle and may be time to hire the team for help. But which one do you need, bookkeeping services, or accounting services? These terms have mostly been misunderstood and used interchangeably.
Here are the key points you need to know to decide which is best for you.
Bookkeeping and Accounting: How are they different and similar?
Bookkeeping is a vital first step in the accounting process. Bookkeepers primarily record transactions to track the finances and glance on the amount and its particulars going in and out of your business. They are in charge of recording income from services and expenses such as utilities, rent, and office supplies. Also, they manage payrolls and create invoices making payment easy for owners. There are times that bookkeepers make adjustments and create bank reconciliation statements to record the discrepancies in book balances and bank transactions.
With bookkeeping at hand, accounts payable or the money you owe, and accounts receivable or the money owed to you will be tracked accordingly. Bookkeepers also keep tabs on all invoices and due dates and eventually follow up with late payers. Unpaid dues will be settled, and the owner does not have to pay twice. All these will then be recorded as a business expense in the ledger.
The general ledger will account for all the relevant debit and credit entries and will store all the financial transactions, namely the income and expenses.
On the other hand, an accountant analyzes the financial data recorded by the bookkeeper. Accounting services include giving business owners with important business insights and financial advice based on the information recorded and maintained. Typical tasks performed include verifying and analyzing data, generating reports, performing audits, preparing financial reporting records like tax returns, income statements, and balance sheets, and providing information for forecasts, business trends, and opportunities for growth.
The most crucial part is, Accountants can help business owners understand the impact of financial decisions. All in all, the accountants give reports that bring key aspects to inform business owners of their finances’ stand and interpret what they mean. The same way, it would guide the owners of the steps and strategies they can do to avoid future loss and where their businesses are expectedly geared.
Bookkeeping keeps a record of all purchases and sales. At the same time, accounting is a subjective look at what every data means for the business. Technically, an accountant can be a bookkeeper, but a bookkeeper cannot be an accountant without proper certification.
Consider which of these professionals or teams you need for your business.