Difference Between Accounting And Bookkeeping Services
The word accounting covers a lot of different services. Accounting is simply defined as production of business’ financial records and principles of accounting are applied to finance, accounting, auditing and bookkeeping. Accounting originated in Mesopotamia actually in which people are using accounting methods to be able to record the growth of their herds and crops. And a thousand years later, it becomes more complex and sophisticated system that we’re using today to meet the needs of governments, financial institutions and businesses.
So what makes accounting as well as bookkeeping different services even though both of these two are concerned in dealing with the finances of the company? That is exactly where these 2 end their similarities because bookkeepers serve the foundation in creating good audit trail of the daily financial operations that the company has.
As for the activities it can basically be anything from recording daily financial transactions of a business, setting up sound financial filing system based on the set standards of a single or double entry bookkeeping, assist in building solid financial team for the business from accountants, payroll preparation firms etc., categorization for preparation and reviewing data to hand over to the accountant or accounting department of the business, providing the business owner cost and cash flow information which helps them support and grow the business, recording daily financial transactions of a business, and reconciling cash accounts and bringing ledges to trial balance stage.
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Accountants are taking the information that the bookkeepers have provided them. Once they have the information, they are going to make reports and do analysis of it to be able to help the business get financing, plan for the future, put a value on their business and prepare for tax the tax reporting. The term accountant comes from the French word “compter” which means to score or count.
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Accountants are assisting business owners to make decisions of what kind of company they wish to create from corporation, LLC, partnership, sole proprietorship and the likes. Other accounting services that will be required by the business to properly manage their finances including tax preparation, forensic accounting, cost accountants and business valuation.
For small business owners, making use of a bookkeeping service regularly is an integral step for their success. This is going to give them a firm foundation and save money as well in the long run. These days, there are many businesses that have opted to do bookkeeping on their own using software or spreadsheet system. There’s nothing wrong with this so long as proper training is provided to have basic understanding of bookkeeping as well as the software’s function.