Bookkeeping is the process of keeping proper accounting records of spending and revenue of a business. This includes balancing the bank reconciliation, financial statements, posting debits and credits, producing invoices, maintaining and balancing subsidiaries, historical accounts and completing the payroll.
Bookkeepers traditionally use general ledgers or journals to record these financial transactions. More recently many people are choosing to use accounting software such as QuickBooks and Peachtree to keep track of their entries, debits and credits. The data that is collected is used by CPA’s for the planning of the business.
Accountants or CPA professionals on the other hand use financial information compiled by a bookkeeper or business owner, and produce financial models using that information. Their roles comprise of preparing adjusting entries (recording expenses that have occurred but aren’t yet recorded in the bookkeeping process), preparing company financial statements, analyzing costs of operations, filing income tax returns and aiding the business owner in understanding the impact of financial decisions.
The information can be used by the business for forecasting, identifying business trends, managing cash-flow and seeing if there are any opportunities for growth.
ADANTAGES OF HIRING BOTH ACCOUTANTS AND BOOKEEPERS
- Accountants look at the bigger picture rather than daily numbers or transactions that make your business tick.
- Bookkeepers keep track of day to day transactions, essential for filing business taxes and keeping on track of your cash flow.
- Tax Experts: The accountant assists the business to file their tax returns. They are able to interpret your financial information and advise on how to make the best decisions on overall performance and resource allocation.
- Having a bookkeeper in your business will help you manage your time well and give you ample time to run your business without having to worry about bookkeeping. They will help you with keeping records, manage your expenses, payroll, pay pending bills etc. this will give you piece of mind. Choosing a financial expert who has an understanding of your industry is particularly advantageous, for example a specialist restaurant bookkeeper can help you to understand your finances & make recommendations more quickly.
- By having more time for your business, this will help you to grow your business and focus on the day to day running without distractions or having to learn complex accounting software. The accountant and bookkeeper on the other hand will concentrate on their roles thereby allowing your business to reap greater financial benefits.
Bottom line is, having these two professionals in your business will immensely contribute directly to the long-term success of every business.
Article written by Balanced Books by Joe, CT Bookkeeper