What is the difference between a Bookkeeper and a CPA? These individuals support your business in different stages of the financial cycle.
Bookkeeping records financial data by creating invoices, entering bill information, completing payroll, and making sure all banking transactions are entered. Many bookkeepers also make adjusting entries as needed and prepare the financial statements. In a nutshell, bookkeeping is the collection, sorting and recording of financial transactions of a business.
Accounting provides additional reporting that bring key financial indicators together which results in a better understanding of actual profitability. Accountants complete income tax returns and aid the business owner in understanding the impact of financial decisions such as strategic tax planning and financial forecasting. In other words, accounting is the process of identifying, measuring and communicating economic information to permit informed judgements and decisions by the user of the information.
Organized financial records and properly balanced finances produced by the bookkeeper, coupled with smart financial strategy and accurate tax filing by the accountant, contribute directly to the long-term success of every business.
Some business owners learn to manage their finances on their own, while others opt to hire a professional so that they can focus on the parts of their business that they really love. Whichever option you choose, investing—whether it be time or money—into your business financials will only help your business grow.