In a world that is growing fiercely competitive, every business organization is running from pillar to post in order to outperform one another. However, success does not come easy. It rests on multiple pillars, the most crucial of which are the ones that are often neglected like accounting and bookkeeping.
Though these terms are commonly used in an interchangeable way, both, accounting and bookkeeping entail highly different activities. Nevertheless, before one can utilize these tools to boost financial health, it is important to know the details about what is accounting and bookkeeping services.
What Is Accounting and Bookkeeping Services?
Accounting and bookkeeping might appear to be almost similar to an untrained eye because both these functions often deal with the use of financial data. Nonetheless, accounting and bookkeeping carry certain inherent distinctions.
To put it simply, bookkeeping merely involves recording a business's financial transactions while accounting includes classifying, analyzing, interpreting and summarizing financial data.
The basic objective of bookkeeping is to ensure that the records of all financial transactions of a company are arranged and kept in a neat and systematic order. Whereas, the essential goal of the accounting process is to gauge a company's financial situation and establish controls which can rectify any errors.
If at all, bookkeeping can be considered to be a subset of accounting based on which the entire financial infrastructure of a business operates. To better understand what is bookkeeping services and what are accounting services, it is wise to delimit the specific functions which an accountant and a bookkeeper performs.
What's the Difference Between an Accountant and a Bookkeeper?
An accountant and a bookkeeper perform a variety of different functions which help distinguish them from one another. Though these functions are known to overlap at times, there still exist well-defined lines of authority and responsibility.
A number of people frequently wonder as to what does bookkeeping services include and whether it partially or wholly coincides with the accountancy functions of a business. To answer this question, it is vital to know what exactly are the roles assigned to a bookkeeper.
- Maintaining a record of everyday financial transactions
- Processing payments, receipts, invoices etc.
- Posting an accurate account of debits and credits on a daily basis.
- Assisting in the completion of payroll-related tasks.
- Reconciliation of multiple accounts in a methodical way.
Bookkeeping does not require any specific skill sets. Bookkeepers are only expected to have a knowledge of general financial topics so that they can carry out their work with accuracy and precision.
More so, bookkeepers do not usually have much financial expertise because their job profile does not require any sort of analysis. Instead, they are simply meant to perform routine functions and collect data.
It is significant to note here that no critical management decisions can be taken on the basis of data provided by bookkeepers.
The primary way in which an accountant differs from a bookkeeper is that accountants have a broader canvas to operate on. They use the work recorded by the bookkeepers in order to analyze the business' past performance. This further enables them to render a financial projection of the company's future needs.
In other words, accounting service basically includes:
- Assistance in establishing a business.
- Planning and advising about taxation.
- Auditing, financial reporting and corporate compliance.
- Advising about appropriate financial management.
- Setting up systems to facilitate record-keeping, archiving and document storage.
- Maintaining, analyzing and interpreting the information derived from general ledgers.
- Creating a proper budgetary system.
- Scrutinize financial data and prepare financial statements.
Owing to the complex nature of these functions, accountants require to be specially trained. They have a field of expertise within which they work. The management regularly uses the interpretations and projections provided by the accountants to make important business decisions.
The Way Forward
With the advent of technology, the answer to what is accounting and bookkeeping services has fundamentally changed. Both of these functions have become way more interspersed, productive and efficient than they were before.
This is precisely why small businesses need to focus more on accounting and bookkeeping if they want to stay relevant and driven in the current financial climate. After all, both of these services form the very foundation on which the true effectiveness of a business rests.
You can avail the services of Paysquare in this regard and stay focused on your core business. With a combination of technology and best practices, the expert team provides practical and timely assistance in a professional manner.