While bookkeepers and accountants share common goals, they each comprise a different stage of the fiscal lifecycle. Maintaining a general ledger to record income and expenses is a chief component of bookkeeping. The business size and number of daily, weekly, and monthly transactions dictates the complexity of a bookkeeping system. Conversely, accounting is a high-level process that uses data previously compiled to produce financial models.
Decoding the Secrets
Accounting practices are more subjective than bookkeeping, which is primarily transactional. Many in-house bookkeepers are employees with ample downtime to manage the books. Accurately balanced records and financial documents produced by both accounting and bookkeeping practices are key factors to a thriving and profitable business. Here are the top four accounting secrets your current bookkeeper should know. ??
Payroll taxes between states are complicated. For states without reciprocity agreements, employers must withhold payroll taxes in the states where the employee works and lives. Your bookkeeping records must indicate the situation accurately. Errors in your books regarding withholding taxes across state lines may result in a tax audit.
Accounting software does not fix data input errors. Many small business owners view accounting as a distraction from their core competencies of serving clients, making sales, and boosting cash flow. While software products make it easier to manage records in-house it is easy for mistakes to occur. For instance, data input errors can potentially create compounding inaccuracies in corporate tax returns and mistakes on external financial reports.
Accurate and timely financial data increase profitability and reduce costs. Thought leaders might not realize that implementing the proper bookkeeping processes and procedures produce sound financial statements and opportunities for reducing costs. Accordingly, essential accounting services can help boost profitability. User-friendly bookkeeping software programs may simplify bookkeeping, but without the help of professional accounting services, your bottom line may suffer.
Generally Accepted Accounting Principles requires the use of the accrual method of accounting. Compliance relates to the way income and expenses are recorded on the balance sheets. For your fast-growing business to be GAAP-compliant, you must use the accrual, not the cash-based method of accounting. Various other principles must be observed to ensure usefulness, timeliness, honesty, and accuracy of the financial data.
Adding an accountant to your team ensures accurate accounting processes and helps avoid frustration. MVU Online offers a variety of accounting-related degree programs. Another option to consider is a master in public policy to learn more about global accounting methods.
The Value of Accounting
Business owners recognize the significance of accounting when the information they obtain supports the growth of the organization. Cloud technology makes the integration and automation of inputting data into general ledgers fast and accurate. It also facilitates affordable and feasible Web-based time tracking, accounts receivables and payables, and job costing. If outsourcing accounting services does not align with your company’s strategy, partnering with a third-party accountant equips your organization with the financial intelligence to execute better business decisions. Providing clean books also enables your firm to generate accurate and useful tax returns as well as audit-ready performance reports.