Are you interested in outsourcing your daily financial activities to a professional as your company grows? Do you want expert advice on business processes and operations that allow you to work smarter and be more profitable? Bookkeeping is an indispensable process for every profitable business. But what is accounting? And how does bookkeeping differ from the things you are paying your accountant for?
While bookkeeping has traditionally been interpreted as the systematic record, organization and archiving of financial transactions within a company or organization, modern bookkeeping has evolved to include all this, as well as support for operational performance.
Today’s bookkeeping is not just about books! New generation bookkeepers not only help you keep track of the cash flow in and out of your business in an organized way, but also provide you with experience and knowledge to help you advance your business. Like a personal trainer in the gym, your bookkeeper offers you assistance day by day, week by week, month by month to help you focus on your goals.
The role of a bookkeeper
A crucial part of bookkeeping is the recording of your company’s financial transactions and the guarantee that these records are accurate, complete and up to date. Regardless of whether you have an internal member of your team that is in charge of bookkeeping functions or outsource them to a bookkeeping professional, your bookkeeper will record and track everyday transactions and operational activities, such as:
- Billing and receiving payments
- Invoicing for services
- Payroll processing
- Bank Reconciliations
Today, bookkeepers also offer support to mid-size businesses to find the best applications and software technologies that suit their needs, as well as practical advice on business processes. They can provide operational information and advice on trends, opportunities and threats to help you stay ahead and handle any obstacles. Their job is to run with you, so you can focus on your strengths.
Why is bookkeeping important?
All companies must know the cash flow and operating performance to remain profitable. Detailed bookkeeping is crucial for businesses of all sizes, as it allows owners to keep an updated record of current incoming and outgoing amounts, amounts owed by customers and the company, and more.
In addition to the financial aspects of accounting, today’s accountants can also provide valuable advice and ideas about business operations. While it may seem obvious to keep these details in order, and many new businesses and SMEs are launched with the intention of keeping their bookkeeping records, bookkeeping can become more complex quickly with the introduction of taxes, assets, loans, employees and investments as a company grows.
How is bookkeeping different from accounting?
While accounting and bookkeeping have equally important functions in financial management and may seem somewhat similar at first glance, there are some key differences. Bookkeeping and accounting have significant overlays, but in general, the bookkeeper will lay the groundwork for the accountants, providing essential data for their function. A great bookkeeper will run with your accountant to provide information about the past, present and future of what your business is doing and what you should do to guide it towards its objectives.
In addition, bookkeepers can also offer add-ons, such as providing continuous business information throughout the year, advice on operations, processes and technology, and a new set of eyes and experiences to draw your attention to previous opportunities or warning signs. While a bookkeeper generally deals with the daily record and organization of financial data (payroll processing, billing and transaction logging), an accountant will be responsible for higher and less frequent tasks, such as financial statements and financial advice, analyze the overall performance of the company, set budgets and complete tax returns.
While both are concerned with the finances of a company, bookkeeping is primarily concerned with the accurate recording of business transaction data, while accounting involves the interpretation of such data and the provision of fiscal requirements.