Bookkeeping and accounting services are essential financial functions for any business, though they serve different purposes. Bookkeeping Services in Cleveland. Think of bookkeeping as data recording and accounting as data analysis and strategy.
1. Bookkeeping Services (The Historian)
Bookkeeping is the foundational, day-to-day work of systematically recording every financial transaction a business makes. The primary goal is to provide a complete, accurate, and organized record of a company's financial activities.
Core Bookkeeping Tasks:
Recording Transactions: Logging every sale, purchase, receipt, and payment into a journal or accounting software.
Managing the Ledger: Classifying transactions into the correct accounts (e.g., categorizing an expense as "Utilities" or "Office Supplies").
Accounts Receivable (A/R): Creating and sending customer invoices, and tracking incoming payments to ensure timely collection.
Accounts Payable (A/P): Entering vendor bills and processing payments to suppliers.
Payroll Processing: Managing employee wages, deductions, and tax withholdings.
Bank Reconciliation: Comparing the business's internal records to the bank and credit card statements to ensure every transaction is accounted for and the books are accurate.
Monthly/Quarterly Close: Reviewing and finalizing all data at the end of a period to prepare for the accounting phase.
2. Accounting Services (The Strategist)
Accounting is the process of interpreting, classifying, analyzing, summarizing, and reporting the data generated by the bookkeeper. It focuses on using that historical data to measure financial health and inform future business decisions.
Core Accounting Tasks:
Financial Statement Preparation: Creating the major financial reports from the bookkeeper's data:
Income Statement (Profit & Loss): Shows revenue and expenses to calculate profit over a period.
Balance Sheet: Shows assets, liabilities, and equity at a specific point in time.
Cash Flow Statement: Shows how cash moves in and out of the business.
Tax Planning and Preparation: Analyzing financial data to legally minimize tax burdens and preparing and filing all required federal, state, and local tax returns.
Financial Analysis and Consulting: Interpreting the financial statements to provide insights into performance, such as identifying costly spending trends, assessing profitability, and forecasting future revenues.
Auditing: Formally verifying the accuracy and reliability of a company's financial records and compliance with regulations.
Budgeting and Forecasting: Helping the business owner create financial plans for the future and setting strategic goals based on data.
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