Tuesday, June 28, 2022

🔴 Accounting Vs. Bookkeeping? | Differences & Similarities | Your Small Business Needs Explained

If you're thinking to hire bookkeeper or an accountant in this video i will share everything you need to know about these two roles before you decide which one best meets your business needs hi and welcome my name is lena i'm a certified public accountant and i've been in this field for 10 plus years now in today's video i will share the specifics of the.

Function of bookkeeping and the function of accounting we will chat about the main similarities and differences between the two roles including the required credentials and typical job responsibilities if your accountant does your bookkeeping by the way you may be paying more than you should for the service the information that i'm about.

To share with you will help you decide whether you need a bookkeeper or an accountant it will be particularly useful to those of you who own a business or plan to start one as well as those of you who may be interested in this career field some business owners learn to manage their finances on their own while others.

Opt to hire a professional so that they can focus on the parts of their business that they truly love i know many new business owners who needed some help understanding whether they needed to hire a bookkeeper or an accountant when most people think about the difference between bookkeeping and.

Accounting in many cases it is very difficult for them to pinpoint the distinction between the two both bookkeepers and accountants do perform similar jobs but they support your business in different stages of the financial cycle as a rule bookkeeping is more transactional the main goal of.

Bookkeeping is to record financial transactions such as payments to vendors expenses and revenue bookkeeping is a direct record of all business transactions that have a financial impact in contrast accounting is more subjective and in my opinion the best way to describe it is as a process that.

Interprets various financial events and provides insights into the financial health of your business based on bookkeeping information let's dive deeper and start with the function of bookkeeping bookkeeping is the process of recording daily transactions in a consistent way here are four main functions of bookkeeping.

Recording financial transactions producing invoices preparation of financial statements usually these are your balance sheet your statement of cash flows and your income statement and maintaining and balancing general ledgers a bookkeeper is usually in charge of a company's general ledger the general.

Ledger is a basic document where a bookkeeper records a revenue and expense receipts all transactions made by your business need to be recorded in the ledger and certain items need supporting documents for tax purposes this is very important and by the way i have an entire video here on my channel dedicated to the.

Requirements for record keeping per the irs and if you're curious how long you should keep certain supporting documents please watch this video i will link it in the description below now let's move on to the function of accounting accounting is a high-level process that uses financial data compiled by a bookkeeper or a business.

Owner for detailed financial purposes the accounting process is more subjective than bookkeeping because it involves actual interpretation of current tax and current accounting rules and understanding how those rules apply to your business transactions accountants look at the big picture normally an accountant would be.

Responsible for a variety of tasks but i would normally categorize these tasks in four main groups helping the business owner and understanding the impact of financial decisions reviewing or preparing financial statements performing financial analysis such as budget to actual for example and.

Preparing and filing a tax return i would say the key part of the accounting process is analyzing financial reports to help you make sound business decisions as a result you will gain a better understanding of actual profitability and cash flows in your business the bottom line is this accounting turns the information from.

The general ledger into insights that reveal the bigger picture of your business a good accountant can help you with tax planning with financial forecasting and of course tax filings do bookkeepers and accountants have similar education and credentials a simple answer is no they don't let's chat about the similarities and differences between.

Bookkeepers and accountants it is true that both can do the same work but different skill sets are the main difference between the two an accountant can be considered a bookkeeper but a bookkeeper cannot be an accountant without proper certification a bookkeeper's role is to record your business transactions and keep you.

Financially organized an accountant's role is to provide consultation and an in-depth analysis bookkeepers and accountants have different credentials usually the bookkeeper's work is overseen by either an accountant or the small business owner whose books they're doing there's no set educational requirement.

To become a bookkeeper bookkeepers aren't required to be certified to handle the books of their customers or their employer but of course licensing is available both the american institute of professional bookkeepers and the national association of certified public bookkeepers offer accreditation and.

Licensing to bookkeepers so if you do decide that you need one i would suggest you look for a bookkeeper who has one of these two credentials to qualify for the title of an accountant generally an individual must have at least a bachelor's degree in accounting or in some cases finance works too.

Accountants with sufficient experience and education can obtain the title of a certified public accountant to become a cpa an accountant must pass the uniform certified public accountancy exam and possess experience as a professional accountant to help you visualize everything we just covered here's a quick summary.

A bookkeeper would be able to balance your books while an accountant will analyze them for you a bookkeeper would reconcile all your finances while an accountant is capable of producing financial reports and interpreting them a bookkeeper does not give tax advice while a tax accountant can advise on tax compliance bookkeepers reconcile your.

Accounts and provide ongoing support as needed while an accountant will help answer questions related to your specific transactions and their accounting treatment and will also provide advice based on your numbers if you would like to learn more about the cpa exam what it consists of and how.

I became a cpa please watch one of my videos where i explain how i passed the cpa exam and the advantages and disadvantages of being a cpa i hope that this quick explanation helped clarify the main differences and similarities between accounting and bookkeeping let me know in the comments below what type of service you're.

Currently using whether it is bookkeeping or accounting if you got value out of this video please do me a big favor subscribe to my channel ring the bell and comment below to let me know what other small business related topics you would like to see here on my channel going forward i would love to hear from you thank you so much for.

Watching and for supporting my channel it is very much appreciated and i will see you in my new video tomorrow take care

RELATED ARTICLES

Most Popular