Many people don’t know that though bookkeeping and accounting go hand in hand, they’re not actually the same process. There are marked differences between the two. TaxWise Accounting helps us define the fine lines between the bookkeeping and accounting.
Before accounting takes place, bookkeeping must be done first. Bookkeeping involves the consistent inputting of information pertaining to day to day financial actions. This information is then used as a basis for making crucial decisions to help strengthen a business. Bookkeepers must in paper or digital form record any transactions related to finance. They must show what is owed, what’s been paid, and what’s currently in the bank accounts. They do the task of working out the payroll and collecting information into a ledger or program on a computer. Sales and expenses are recorded in these ledgers. Any debit or credit transactions are recorded. Copies of invoices are kept for records.
Important documents and papers like receipts are kept in order by bookkeepers to help support the information collected. Basically any information related to the current business finances and financial transaction histories are recorded by bookkeepers. The ledgers are like a daily diary in which bookkeepers make a record of amounts on receipts from sales and expenses. Every time any service or product is sold, the bookkeepers input the information.
Accounting takes the information gathered from bookkeeping for use in practical ways. For example, based on the bookkeeping records, a business owner can see where he needs to make changes to further success. If something is already working well, he can continue to implement it. Accountants make sure nothing is missed when it comes to entries in the ledgers and input expenses or sales that happened but haven’t been recorded yet. All the information available to them are used to make daily, weekly, monthly, or yearly statements depending on what the business requires. They can calculate how much operations cost. Another important duty of accountants is preparing tax reports. Overall, they help a business owner make sense of all the numbers gathered from bookkeeping. It helps the owner to see if he’s making any profit or to see what he can do to improve profits. Having all that information explained can better help business owners to plan for the future better and make less mistakes financially.
Bookkeepers and accountants must pay attention to detail in order to have accurate financial data that will help business owners to succeed. They must have the appropriate degrees and certificates to show their skillful training. They must have an in depth knowledge of the field of finance and know the inner workings of financial data. There is always something new to learn in the area of finance, so accountants can continue to get more training in the latest financial trends and technology used in accounting.
Really small businesses have the business owners typically do both bookkeeping and accounting. However, most businesses avail themselves of the services of a bookkeeper and accountant like TaxWise Accountants Brisbane to free themselves for the day to day running of their business.