Bookkeeping and Accounting
The confusion between bookkeeping and accounting has become increasingly common in recent years. One reason for this is that many smaller businesses, especially small businesses in the UK tend to think of their accounting firms as bookkeeping only. This is a profound mistake, which you'll know all too well if you're an accountant yourself.
Bookkeeping, or maintaining financial records, is a necessary part of any business. And, although the term 'bookkeeping' may imply that the work is only required at the end of the year when recording last year's income, it's much more. Today's accounting firms are service-based and so are bookkeeping and accounting.
Advances in the Global Economy
It is widely accepted that professional services provided by accounting firms are different to bookkeeping. For example, accounting firms may have access to client information, whereas bookkeeping requires confidential material. In addition, professional services are often required in international trading. Outsourcing can help your business maintain effective control of such aspects of its day-to-day operations, while benefiting from professional services and staying at the cutting edge of current advances in the global economy.
Company's Records
So how are they different? In essence, accounting firms are professional services providers. They provide bookkeeping, payroll, benefit administration, tax returns, asset analysis, and creditor relations, just to name a few. On the other hand, bookkeeping represents the simpler side of accounting. It involves preparation of financial reports and managing the records manually. A bookkeeper is responsible for ensuring accuracy and validity, while keeping the company's records updated and easily accessible.
Accounting Firms
That's not to say that accounting firms aren't professional services providers. There are many who hire accounting firms for comprehensive and consultative financial reporting. And there are firms that offer outsourced accounting services, focusing on specific areas of accounting, such as: human resource management, vendor management, payroll processing, cash management, and accounting information systems. Outsourcing accounting is advantageous because it allows you to focus on core processes.
Software Programming Service
In answer to the question "how are bookkeeping and accounting the same thing?" outsourcing accounting means you turn over the bookkeeping responsibilities to an outside firm. This is usually accomplished through a service provider arrangement, wherein the accounting firm agrees to perform accounting tasks for a company on a contract basis. In this type of arrangement, an accounting firm is paid based upon the volume of work they perform. The service provider typically provides accounting support, data entry, and software programming services.
Outsourced Accounting and Bookkeeping
There are several advantages to outsourced accounting and bookkeeping. The primary advantage is the reduction in overhead and salaries that are generally associated with accounting positions. Many accountants are paid on an hourly basis, which makes it difficult to make a living by maintaining a full-time accounting career. By outsourcing accounting jobs, companies can reduce their overhead costs and free up salary space. By contracting with an accounting firm, accounting professionals can also enjoy the perks of working at a good company and the benefit of having a stable employment.
There are also disadvantages to outsourcing accounting tasks. While accounting firms are reputable and reliable, they can also cost a business owner money. If the accounting task is not completed correctly, then the results could be costly for the company. Additionally, accounting firms typically hire individual accountants, who may not have the skills necessary to handle the intricacies of accounting properly.
Small Business Administration
The majority of bookkeeping and accounting firms are independent organizations. A number of them are members of the American Society of Accountants (ASA). Because these firms have memberships, they have to meet certain standards, such as paying their own licenses. This means that bookkeepers and accountants employed by these firms may not be certified by professional associations, such as the American Institute of Certified Public Accountants or the American Academy of Professional Bookkeepers. As with all independent business accounting firms, they may not receive accreditation from government bodies, including the Small Business Administration.
Payroll Services
When outsourcing bookkeeping, there are several considerations to make. First, the accounting firm must determine what type of payment would be appropriate. Fees for services can range from flat rates to per bill payments. In some cases, the accounting firm may provide a flat fee for the job while maintaining certain aspects of accounting, such as maintaining journal entries. Other services, such as payroll services may be required.
Accounting And Bookkeeping
Whether your accounting needs are outsourced accounting services or simply bookkeeping, be sure to take some time to understand how each service works. It is possible to obtain the services of an accounting firm without a lot of knowledge, but it is also possible to outsource accounting needs, such as bookkeeping, to a reputable firm with plenty of knowledge and experience in the field. Regardless of which option you choose, understand what your accounting needs are so you can select an accounting firm that is knowledgeable and experienced enough to meet those needs.
