Everything You Need to Know About Accounting and Bookkeeping Services

Many people assume that a bookkeeper provides the same services as an accountant. However, that is not the case. An accountant can adequately perform the duties of the bookkeeper, whereas a bookkeeper will fall short on some of the responsibilities of an accountant.

What are Accounting and Bookkeeping Services?

Bookkeeping is unavoidable for every business that spends and earns money. Preparing books of accounts and recording expenses is a legal requirement for all business entities. Failure to keep an accurate record of the company’s financial transactions can be costly, especially if the government orders an audit of your taxes.

The information collected and kept by bookkeepers is essential to the management, investors, and regulators. The taxes you file and pay are highly dependent on the records in your book of accounts. Without the right data, you’ll have no defence against a tax liability.

Bookkeepers

A bookkeeper is primarily responsible for recording financial transactions, producing invoices, recording debits and credits, completing the payroll, producing financial statements and balancing general ledges for accuracy. Their focus is to keep and maintain records for reporting and further accounting purposes. It can be done in-house or outsourced.

Accountants

An accountant, on the other hand, interprets, reports, and summarizes the financial data. He relies heavily on the information collected by the bookkeeper to determine the financial status of the business. Likewise, it can be done in-house or outsourced.

Business owners rely on an accountant’s interpretation to make important decisions regarding the company. For example, if the accountant feels the overhead costs are hampering the growth of the business, management may decide to move the company to a different location where rent is lower, or they may choose to let go of support staff if the wage bill is too high.

The Differences Between a Bookkeeper and an Accountant

For one to become an accountant, he needs to have at least a bachelor’s degree. An accountant is expected to have a clear understanding of the accounting process. It is not surprising to sometimes find an accountant serve as an advisor to a bookkeeper because they have deeper knowledge in accounting.  If an accountant has a higher level of expertise and has passed the CPA, he becomes a Certified Public Accountant.

A bookkeeper, on the other hand, is one who has taken several accounting courses and has a basic understanding of accounting. Some of the other responsibilities of a bookkeeper include gathering financial documents including cheque payments, deposit records, bills from vendors, bank statements, receipts and invoices. He is then expected to balance the accounts and reconcile the figures. An accountant will then verify the data collected and analyze the company’s performance.

What is Record and Bookkeeping?

During the bookkeeping process, the bookkeeper collects data on all financial transactions. This information is then recorded as required. If a software is used, the bookkeeper needs to feed in the data and the system automatically produces a report after summing up the credit and debit. Once the record is created, it becomes easier for an accountant to provide an analysis which guides the company when coming up with marketing strategies. The report also helps in financial forecasting, especially if there is a predictable pattern.

Why Bookkeeping is Important in Accounting

An accountant cannot fully execute his responsibilities if he does not have finance books that are well kept. A bookkeeper who carries out his duties well makes work much easier for an accountant. Financial records that are well organized naturally means the accounting will be done faster and accurately.

A business relies on financial statements from the accounting department to be able to come up with an appropriate financial strategy. The long-term success of the company relies heavily on the financial interpretation produced by accountants.

Read more about out outsourced bookkeeping services here.

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