Accounting and bookkeeping are two terms that often get mixed up, but they have very different purposes. Accounting is the process of tracking income and expenses to produce financial statements. Bookkeepers help accountants do their job by recording transactions such as purchases, sales, checks written or received, deposits made into a bank account. In this post, we’ll help you learn the differences between accounting and bookkeeping services in Vancouver, WA.
What is bookkeeping, and what are its purposes?
Bookkeeping is the process of recording financial information, such as purchases, sales, or deposits into a bank account. Bookkeepers are responsible for creating and checking that transactions have been recorded correctly in bookkeeping records before they make entries to be posted into accounting data. The bookkeeper’s responsibilities also include reconciling accounts at year-end by comparing bookkeeping totals to accounting totals.
What is accounting, and what are its purposes?
Accounting refers to the process of tracking income and expenses to produce financial statements such as balance sheets or profit-and-loss statements. The accountant’s responsibilities are to make sure bookkeeping records match the accounting data and that all entries, such as receipts or payments, have been posted correctly in an accounting system. Accounting records are used to summarize and analyze transactions, while bookkeeping is used to track them.
What is the difference between accountants and bookkeepers?
Accountants and bookkeepers have different roles. Accountants are responsible for the bookkeeping data. Bookkeepers record and take care of their day-to-day tasks, including reconciling accounts at year-end by comparing bookkeeping totals to accounting records. Bookkeepers often conduct bookkeeping monthly before sharing the financial reports with accountants, who will review them before posting transactions into financial statements.
Bookkeeping responsibilities are to make sure records match the accounting records and that all entries, such as receipts or payments, have been posted correctly in an accounting system. Accounting is used for summarizing and analyzing transactions, while bookkeeping is just tracking them daily.
When it comes to the skill set required, bookkeeping can be done by anyone with basic mathematical and record-keeping knowledge. Accounting can only be done by certified accountants and finance professionals with a university degree in accounting. You also need to be registered with national accounting bodies like CPA before you can claim to offer accounting services to multiple businesses.
Overall, accounting services play a more prominent role in the running of a business. Management uses accounting records to make critical business decisions that may impact the profitability of the organization.
Why should entrepreneurs hire an accountant or bookkeeper?
It’s beneficial for entrepreneurs to hire an accountant or bookkeeper because it will help them better plan their business expenses, investments, and potential earnings. It becomes easier for a business owner to track the cash flow and cancel any unnecessary costs when the bookkeeper’s records are up to date.
Meanwhile, the accounting records will come in handy at the end of the financial year when it’s time to determine the actual revenue, profit, or loss the business is incurring. From this, you will be able to make vital decisions to maximize the objectives of the company.
Different ways that accountants and bookkeepers can help your business succeed
By hiring a bookkeeper and an accountant, a new business owner can focus on growing the business rather than other tasks. Some of the benefits involved are:
– Bookkeepers can help entrepreneurs track their expenses and reduce expenditure.
– An accountants will calculate the figures for a company’s turnover, profits, or losses at the end of each financial year to determine how much income tax needs to be paid on these numbers.
– Accounting services are critical at the end of each financial year with profit projections and budgetary planning for future expansion plans.
– Bookkeeping services are helpful for entrepreneurs in making business decisions
Common mistakes that people make when handling their own books
Entrepreneurs who decide to handle business bookkeeping and accounting needs tend to make a variety of blunders. Some of the obvious mistakes people make are as follows:
– Failing to record financial data for every purchase
– Omitting bookkeeping entries and not keeping a detailed account of receipts
– Forgetting to keep track of income from multiple sources, including interest on savings accounts, dividends from shares, or bonds. These are all taxable and can be entered at any time in the accounting records.
-Double-entry of incomes or expenses
– Skipping bookkeeping and accounting services. You may be paying more in taxes than you need to or not taking advantage of expenses that could save your business money.
Managing bookkeeping without a bookkeeper will typically lead to mistakes with the financial records, unpaid tax liabilities, unorganized financials, and increased costs.
Conclusion
Do you need help managing your finances? Whether it’s an accountant or a bookkeeper that can give you financial data assistance and guidance, we have professionals on our team to meet all of your needs. Feel free to contact us for more information about how we work with small business owners in the Vancouver, WA, area to meet all their accounting and bookkeeping needs!
FAQ
What is the purpose of accounting and bookkeeping?
Bookkeeping is responsible for recording income, expenses and tracking these two values to determine the profitability of a business or company. Basic accounting is interested in interpreting numbers, considering the tax implications of transactions, and preparing financial statements that will show where money has come from and gone to during a specific period.
What is the primary purpose of bookkeeping?
The bookkeeping service is responsible for recording transactions in a book and determining the balance of a company or business. Bookkeepers record income, expenses, assets, and liabilities to determine how much profit the firm has made over time.
What are some ways bookkeeping services can help your business?
A bookkeeper’s records will allow you to pay less in taxes, make bookkeeping and book balancing easier, save time on bookkeeping tasks, and avoid hiring an accountant or tax preparer for every long year-end.