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How Small Business Bookkeeping is Different from Accounting?

If you are a small business owner, and you are not familiar with small business bookkeeping services, then you should hire a professional bookkeeper for your business. Bookkeeping will ensure that your taxes are done accurately and your finances are accurate as well. Bookkeeping includes various tasks – from entering data to software to working with accountants.

The primary goal of a bookkeeper is to ensure that every financial transaction is recorded accurately. With this, a bookkeeper will record and calculate expenses and income, make bank transactions, raise purchase invoices, and create sales invoices. Bookkeepers have the skills to explain essential financial information to business owners.

Small Business Bookkeeping

Differences between Small Business Bookkeeping and Accounting

The following table shows the difference between accounting and bookkeeping:

Bookkeeping

Accounting

Bookkeeping includes identifying and recording financial transactions.

Accounting includes concluding and communicating financial transactions that were categorised in the ledger account.

Management can’t make a decision based on the data given by the bookkeepers.

Management can make a decision depending on the data given by the accountants.

The primary goal of bookkeeping is to keep a record of all financial transactions.

The primary goal of accounting is to assess the financial situation and offer information to authorities.

Financial statements are not a part of bookkeeping.

Under the accounting process, the financial statements are prepared.

The person that manages bookkeeping tasks is known as a bookkeeper.

The person that manages accounting tasks is known as an accountant.

Provide tax documents and year-end financials to the accountant.

File tax returns, offer tax advisory and conduct tax planning.

Responsibilities of Bookkeepers

The bookkeeper is responsible for recording daily financial transactions accurately and gathering required financial information to run a business successfully. The responsibilities of a bookkeeper may vary depending on the company. Here are common responsibilities of bookkeepers of Melbourne:

·        Suggest, execute or manage accounting software

·        Suggest, execute, and monitor bookkeeping procedures and policies

·        Develop debit and credit accounts, including allocating expense categories

·        Recording income and expenses

·        Managing banking activities

·        Verification of recorded expenses within company’s policies

·        Manage records and backups

·        Producing invoices

·        Completing payroll

·        Tax advice

Bookkeepers in Melbourne maintain a general ledger as a primary component of bookkeeping. The general ledger is a document where a bookkeeper keeps a record of amounts from expense and sale receipts. The bookkeeping system complexity will depend on the business size and the total number of transactions recorded daily, weekly, and monthly.

Responsibilities of Accountants

Accountant Melbourne uses financial data collected by a bookkeeper to generate financial models. The financial statements recorded in accounting are a concise summary of financial transactions. These statements give a clear idea of the company’s financial situation, cash flows, and operations.

Accountants are responsible for maintaining and collecting the company’s daily transactions into financial statements such as balance sheets, cash flow statements, and income statements.

Accounting tasks are:

·        Data management

·        Financial analysis

·        Financial reports

·        Filing tax returns

·        Guiding the business owners to make the right business decision

·        Managing budgets

·        Auditing

·        Tax strategy and planning

The primary part of accounting services is to analyse financial reports to help business owners to make the right business decision. The result of accounting is to better understand the financial status of the company and cash flow in the business. Business owners look to accountants for tax planning, analysis of their financial status, and tax filing.

Similarities between Accountants and Bookkeepers

Bookkeeping for small business and accounting can seem to be the same profession to an unfamiliar person. Both accountants and bookkeepers deal with financial data. Sometimes, bookkeepers in many companies generate reports through financial transactions and perform more accounting tasks.

On the other hand, some accountants record the financial transactions and manage more of the bookkeeping tasks.

Choose the Right Bookkeeper for Your Business

If you are looking for a bookkeeper in Melbourne, then make sure to choose the right bookkeeper. Various things need to be considered while choosing a bookkeeper for your business, such as certification, qualification, years of experience, trust, up to date knowledge and skills, and much more. Choose a bookkeeper that matches your business needs.

Conclusion

Accounting and bookkeeping for small business are important for business success. Some businesses choose a do-it-yourself approach for bookkeeping and accounting, but other businesses hire bookkeepers and accountants for their business to run business smoothly. Hiring an accountant and bookkeeper will help business owners focus on business strategy. Hiring the wrong bookkeeper or accountant for a business can lead to business failure, so make sure the person you are choosing for your bookkeeping and accounting is reliable, experienced, and professional for business growth. If you are looking for bookkeeping services, then you can contact the Reliable Bookkeeping Services provider.

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