If you're a business owner, it's likely that you've considered hiring an outsourced bookkeeper or accountant. Outsourcing has become an increasingly popular option for small businesses seeking to grow their operations and reduce costs. However, many people aren't sure what the difference is between bookkeeping and accounting—or if they even exist at all! In this post, we'll explain why these two services are so important to any growing business owner (and how they differ).
Outsourcing your business's bookkeeping and accounting is critical to growth, but what's the difference between bookkeeping and accounting?
Bookkeeping is a repetitive task that can be outsourced. It involves tracking financial transactions such as sales, deposits made by customers, checks written for employees or vendors, payments made on credit cards or other cash advances (where there’s no record of who owes money), etc. Accounting is more complex than this because it includes analyzing these records in order to determine if they are accurate and complete; interpreting the meaning behind each transaction so you know where your money is going; preparing reports based on this analysis; filing those reports with tax authorities when required by law; providing support services related to these tasks like payroll processing (which involves calculating wages owed) or paying bills (including invoices).
What is Bookkeeping?
Bookkeeping is the process of recording financial transactions and maintaining financial records. It's also the first step in accounting, which is an important part of any business's financial system.
Bookkeepers are responsible for maintaining accurate books and accounts, as well as processing all incoming cash or revenue into their company's general ledger. A bookkeeper may also be involved in other aspects of accounting like preparing tax returns and managing bank accounts.
What are the functions of a bookkeeper?
A bookkeeper is responsible for maintaining the financial records of a company. They record transactions, prepare financial statements and reconcile accounts. They also ensure that the company can meet its tax obligations.
The main functions of a bookkeeper include:
- Recording all business transactions in an organized manner through various software programs (QuickBooks Online, Microsoft Office Excel)
- Preparing accurate reports on income tax returns or other forms required by law as well as maintaining these records securely in accordance with company policies
What is Accounting?
Accounting is the process of recording, summarizing, and analyzing financial transactions. It includes a variety of financial activities such as recording sales, collecting payments from customers, and transferring money between departments. Accountants are responsible for keeping track of a company's financial records so that they can be analyzed later by managers or auditors.
Accounting software helps accountants do their jobs more efficiently by tracking data in real-time (rather than having to wait until later), always giving them immediate access to information about their clients’ finances throughout the day rather than just once per month during tax season (which means no more late nights!).
Accounting is also used as part of business management because it provides important insights into how successful businesses operate; if something goes wrong in an organization during operations such as bookkeeping errors then this could mean losing customers due to lackluster service levels etc...
What are the functions of an Accountant?
An accountant is responsible for the financial reporting of a business. They help with tax planning and preparation, budgeting and forecasting, cash flow management, financial analysis and more.
Accountants can be hired by businesses to provide these services on their behalf or they may offer that service as part of their own practice.
Bookkeeping vs. Accounting- The Importance of Outsourcing Both
If you're wondering what the difference between bookkeeping and accounting is, it's important to understand that both are essential functions in business. In fact, they're two sides of the same coin: outsourced bookkeeping is a function that can be outsourced while accounting cannot be outsourced.
Accounting involves summarizing transactions (e.g., "what did I spend my money on?"), whereas bookkeeping records these numbers for each individual transaction so that they can be used by managers when making decisions about expenses or investments. Both functions have different objectives and goals: while accounting helps explain how money flows through your company's operations, bookkeeping keeps track of those movements within specific contexts.
A great outsourced bookkeeper and accountant can save you time and money in the long run.
Outsourcing your bookkeeping and accounting allows you to focus on other aspects of your business.
It’s not just about saving time, either. Outsourcing a bookkeeper or accountant can also save you money in the long run because they will be able to provide accurate information that is essential for making informed decisions about your company and its finances.
Conclusion
We hope this article has helped you understand the difference between bookkeeping and accounting. Bookkeeping is far less complicated than it sounds but having an accountant on your team can save you a lot of time and money in the long run.
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