Are taxes getting away from your small or medium-sized business? In 2018, the IRS found that Americans owe $131 billion in penalties, interest, and back taxes.
This is because people underreport their taxes and end up owing more later. They may feel as if they don’t have the time to keep up with their income and expenses or do the taxes themselves. This is why you need help with your accounting duties.
Read on to learn the difference between accounting vs bookkeeping and why both are necessary for your business!
What is Bookkeeping?
Bookkeeping is the record of all the financial transactions being made in your business. Although a license isn’t required, many choose to get certified.
When it comes to bookkeeping duties, your bookkeeper will be able to keep these records organized and easy to access. Bookkeepers can also create and review expense reports in order to help you create budgets.
Bookkeepers can also create invoices, track the payment they receive, and pay the monthly bills. They’re also able to reconcile your bank statements each month in order to ensure that everything is accurate.
As you can see, bookkeepers help keep the financial structure of your day-to-day business intact. They work on small tasks that can become overwhelming over time.
What is Accounting?
Unlike bookkeepers, accountants need to be licensed if they’re going to help with your tasks other than bookkeeping. Accountants are able to run reports on the financial statements that bookkeepers create. These reports can help them analyze your business’s cash flow and determine ways to improve your business over time.
They have the ability to help you look at the big picture as they identify trends over time. With this knowledge, they’re able to point out ways you can increase your revenue or reduce expenses. They’re also able to give advice when it comes to the structure of your business or future expansion.
Accounting or Bookkeeping
Now that you know the difference between accounting and bookkeeping, what’s the best choice for you? We recommend hiring both a bookkeeper and accountant, as they work well together. A bookkeeper will be able to keep all of your transactions and organized and help you with the day-to-day work of generating invoices and getting bills paid.
On the other hand, an accountant can help you with the big picture. They’ll help you make better choices when it comes to investments, expansion, and more because they’re able to run reports and analyze the data based on patterns.
Accounting vs Bookkeeping: Improving Your Business
Are you trying to decide between accounting vs bookkeeping? These providers each provide distinctive services that can improve the financial health of your business. If you need to decide between one or the other, small businesses can benefit from a bookkeeper.
By keeping all of your transactions organized, you’ll have an easier time when tax time comes around. Once you decide to hire an accountant, they’ll have an easier time analyzing your financial information because it will all be organized.
Ready to take your enterprise to the next level with outsourced bookkeeping? Contact us today for a free consultation!