Bookkeeping is an important part of tracking the day to day financial transactions of your company, including revenue, purchases, rent, payroll, and more for your business. While many newly minted business owners handle this task themselves, it is also an area where growing businesses find themselves getting into trouble without professional help.
Typically, bookkeepers are required to have significantly less education, experience, and financial acumen than accountants, and many bookkeepers rely on their data-driven mind combined with strong math skills and a small number of accounting courses to qualify for their position. However, it’s important to note that bookkeepers are required to do significantly less than an accountant, so this lower level of expertise should not be seen as a negative.
Bookkeepers work primarily in a data recording role for small businesses. While they may be responsible for some internal process beyond reporting, these activities will still be limited to situations where they are tracking data, generating reports, and managing timetables and deadlines, as opposed to analyzing data and making consultative recommendations.
The typical kinds of services that a small business owner can employ a bookkeeper for include:
The recording of financial transactions.
Posting debits and credits.
Producing and verifying invoices.
Maintaining and balancing:
Accounts payable (AP)
Accounts receivable (AR)
Accountants work in roles that are just as data-driven and detail-oriented as bookkeepers, but they provide significantly more expertise and a much wider array of services for a small business. Additionally, accountants can be non-certified, or certified (CPAs). This distinction is ultimately made upon whether or not an accountant has completed the Uniform CPA Exam, but generally indicates a higher level of education, training, experience, and ability.
Although qualifications for accountants and CPAs can vary from state to state, and even county to county within a state, accountants generally have a four-year degree, and CPAs generally have a Master’s in Accountancy and have universally passed the Uniform CPA Exam.
An accountant ultimately provides services that are more subjective and critical thinking-oriented than a bookkeeper — whose role is largely based in the recording and verification or transactions — and can help to provide a more consultative voice for a business owner in regards to financial planning, especially in the case of a CPA.
Typical services provided by an accountant to their small business clients include:
Preparing and adjusting entries into ledgers upon review
Preparing financial statements for business purposes such as loans
Completing income tax returns
Providing financial analysis and strategies to improve revenue and performance
Tax strategy and tax planning
In the case of CPAs, services may also include:
Tax preparation for your business
Document preparation for the SEC and IRS
Expert witness services for IRS resolutions
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Whether you need bookkeeping or accounting help for your small business, Innovative Accounting can help with professional services that are available nationwide. Contact us today to get started.