Any successful business depends on market expertise, a great product, and careful resource management. Bookkeeping and accounting may not be the most exciting part of owning a business, but they are essential for keeping an eye on the financial health of your business. Below is a quick overview of the differences between these important tasks and how they work together.
What Are the Differences Between Accounting & Bookkeeping?
Bookkeepers record the daily transactions of a business, keeping track of the money coming in and going out. They also prepare invoices, collect payments, and compare the books against monthly bank statements. If they notice discrepancies, they can identify flaws in your record-keeping and ensure all records are accurate.
One of the most important bookkeeping tasks is maintaining a general ledger. This master document forms the basis of your profit projections, profit-loss statements, and other accounting projects. Because so much depends on the raw data in these books, you might think of bookkeeping as the first step in the accounting process.
While bookkeepers keep track of financial information, accountants analyze that data to give a wider view of the company’s finances. In addition to preparing taxes and financial reports, they also use the information in your ledgers to prepare quarterly income statements, balance sheets, and cash flow projections.
The reports generated by an accountant may be required if you’re applying for a loan or government contract, but they can also help with your own long-range planning. They can identify which products and services are more profitable, and this could help guide your future investments. You can also use this information to create realistic annual budgets and set long-term goals for the business.
Whether you’re already a successful entrepreneur or just launching your company, Demshar Eaton CPA has financial expertise you can rely on. Since 1978, they’ve provided personalized accounting services to business owners throughout Ashtabula, Conneaut, and Geneva, OH. Visit them online for more on their accounting and bookkeeping services, or call (440) 992-6622 to discuss your needs with a friendly team member.