Accounting and Bookkeeping Tips for First Time Entrepreneurs
Bookkeeping is paramount for small business owners, this is because it allows you to keep track of your finances and ensure that you are paying your taxes on time.
Accounting and Bookkeeping have Similar Functions
Bookkeeping is a vital part of accounting, but the two terms are often used interchangeably.
Sometimes accountants and bookkeepers are used interchangeably.
There are nuances, however in their functions and we will get into that in this article.
Bookkeeping is Financial Reporting
Financial reporting can also include budgets, forecasts and internal control reviews
The goal of financial reporting is to provide information about an organization’s overall financial health.
Financial statements
show where a company stands financially at any given time, comparing current figures against past results. Financial reporting can also include budgets, forecasts and internal control reviews
Payroll
Payroll involves calculating employee paychecks and paying taxes on behalf of employees. When you outsource payroll services to another business or professional, you’re entrusting them with your confidential employee data and tax information, so be sure you do your research before signing on the dotted line
Taxes and Accounting
Calculating federal, state and local business taxes requires knowledge of tax laws as well as an understanding of your business finances for the year(s) being filed. Depending on the size and complexity of your business, preparing taxes may be something you can handle yourself or require assistance from outside professionals
What are the similarities and differences of Accounting and Bookkeeping?
Bookkeepers record transactions and accounts
A bookkeeper will record all financial transactions, report on them and reconcile accounts. They are responsible for collecting, recording and processing financial information.
Accountants interpret and give analysis
An accountant will analyze and interpret the financial information and prepare financial statements. They will also provide advice on tax and financial matters and can offer guidance on how to improve financial performance.
Bookkeepers work closely with management
Bookkeepers tend to work more closely with business owners and managers on a day to day basis as they are responsible for recording all financial transactions.
Accountants are usually brought in season to consult
Accountants are usually brought in on a more ad hoc basis to provide advice and guidance on specific financial issues.
Bookkeepers and accountants have similar credentials
Bookkeepers will usually have a qualification in bookkeeping or accounting, whereas accountants will have a professional accounting qualification such as ACCA or CIMA.
Bookkeepers can offer a range of services such as bookkeeping, payroll, VAT returns and management accounts. Accountants can offer a wider range of services such as tax advice, financial planning and business advisory services.
4 Bookkeeping Tips for First Time Entrepreneurs
1. Keep track of finances
This means keeping track of your income and expenses, as well as any other financial transactions. This will make it easier to manage your finances and prepare your taxes.
2. Stay organized.
This means having a system for tracking your finances, whether it’s using a software program or simply using a notebook and pen.
3. Review your info in bookkeeping
This means regularly reviewing your records and making sure everything is up-to-date. This will help you catch any errors or discrepancies.
4. Seek professional help when needed.
If you’re having trouble keeping up with your bookkeeping, or if you need help with tax preparation, consider hiring a professional bookkeeper or accountant.
You can also outsource bookkeeping if you want through an offshore outsourcing company.
