Bookkeeping vs Accounting & Your Business
What is the difference in bookkeeping vs accounting? When it comes to finances, your business may need an accountant or a bookkeeper depending on the needs of the organization.
Bookkeeping
A bookkeper records day-to-day financial transactions for the business. They are generally paid less than accountants and don’t need as much education. Part of their tasks are to organize and record financial transactions and other smaller aspects of a company’s financial records. As a business grows, it may find that the bookkeeper can grow into being the accountant but there are times where bookkeeping is simply done by an administrator.
Accounting or bookkeeping firms offer bookkeeping services as well and outsourcing this service with effective systems may be the right approach for you. When a firm is outsourced to manage bookkeeping, they often set up cloud based systems to keep track of your records, making sure that every detail is accounted for and proven by receipts and invoices.
Bookkeepers take care of journal entires, bank reconciliations, keep track of cash flow, record & compile transactions from different sources, and set up your books for further review. Some details they watch out for are mistakes in budgets or invoices and ensuring all documentation that is necessary to prove a transaction is provided.
Accounting
Accountants not only take care of managing the numbers in a business but they are responsible for the bigger picture in the company’s finances.
Accountants use the information put together by the bookkeepers to solve problems and prepare more complex financial reports. They also have a better understanding of how tax plays a part in your business and can draw conclusions from the transaction records. Some duties include preparing tax returns, reviewing financial statements, and analyzing accounts.
Another important role accountants play is to audit a business’s statements and books to make sure it follows ethical and industry standards.
Bookkeeping vs Accounting: What Do You Need?
Hire a Bookkeeper
- Need to record daily transactions
- Have small inventory and a simple business
- Budget for HR is small
Hire an Accountant
- Monitoring & recording complex transactions
- Have large inventories
- Larger budget for HR
Regardless, a CPA accounting firm does both. Contact Advanced Tax if you need help finding out more about what your business needs or to outsource your company’s financial duties.
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