Bookkeeping mainly concerns data entry and digitization of processes in each area replaces manual work. From now on, customer requirements have been replaced by financial advice rather than compliance reports. It is therefore imperative for accounting professionals to change their approach and increase their value in the upcoming business market. Advanced technology-integrated software provides an easy-to-use platform, such as Cloud QuickBooks hosting, which has already changed accounting processes.
Bookkeeping is a process that ends at least with the preparation of a tax return. My opinion is that no layperson can create his own books all by himself, and expect an accountant to produce an accurate tax return.
There must be an interaction between the person who prepares the tax return and the person who prepares the documents. Proper bookkeeping and accounting must be a joint venture between the experienced professional, the contractor and the accountant. Sometimes and almost always at the beginning, the accountant may be the owner of the business.
Financial services can focus on the growth of the organization. The bookkeeping department is probably the centerpiece of the organization’s success. If you want your business to grow further, do not underestimate the importance of bookkeeping.
Accounting services are preferable for small industries because accounting work can be long and complicated. So always make sure you take the time that’s right for you because effective bookkeeping is a great help for start-ups and small businesses.
As this is a complicated process that requires valuable time and effort, it is important to use a professional bookkeeping service provider to meet the challenge of work and solve accounting problems. your job with an experienced and intelligent service provider for your accounting needs.
Importance of Bookkeeping?
More Time Outsourcing this service can save a lot of time that can be put into other works. Back end operations can take a lot of time and can be a distraction too.
Saving money Outsourcing saves time as there is no need to hire an employee and pay him full time or part time wages. By outsourcing it you pay what is needed not more and not less.
Expertise on your side Outsourcing helps in having full time knowledge of the team without having to know them by having them round the clock.
Access to top systems Outsourcing also ensures more and better access to the top tools in the industry. Often most businesses are unable to afford extremely expensive bookkeeping programs. It is also time consuming to keep abreast with the changing laws and regulations. Outsourcing this task resolves this specific problem. In addition to this, nightly backups are created by these top systems to keep records and books organized for years ensuring that you are prepared for unexpected audits by IRS anytime.
Scalability options Whether you wish to expand the horizons of your business or cut down on spending, outsourcing this service allows you to do this in the blink of an eye. The flexibility provided by outsourcing is unprecedented with in-house bookkeepers.Since the advent of online version of the popular QuickBooks reporting software in 2000, business owners are struggling with one question – which version should I go for? Now, the 1990s QuickBooks Desktop users have a common question in their minds i.e. whether to switch to QuickBooks Online. A novice to QuickBooks is often baffled by the choices in front of him.This might lead to spending unnecessary money on the version that you don’t need. To help you out in clearing this confusion and providing a better understanding, we have gathered some key differences between QuickBooks Online and QuickBooks Pro. This will help you choose the right version for you and your business.
Types of bookkeeping
Single entry bookkeeping system:
If the type of business you just created falls into the category of small business, a single entry book keeping system would be very useful. This type of system maintains a record of commercial transactions related to disbursements, collections, purchases and sales.
This type of system is rather an informal system suitable for small business transactions. The bookkeeper generally uses this system to manage a daily summary of cash receipts and disbursements, as well as a monthly summary of cash receipts and disbursements.
In a single entry bookkeeping procedure, each transaction will only affect one account. In the case of a double entry transaction, each transaction would have an entry on both accounts.
If a particular item is sold, the cash receipt or cash deposit account will only be updated with the amount received. The corresponding entry in a sales account will not be made in the one-entry bookkeeping system.
Therefore, it does not provide the complete financial situation of the different systems of the company. If you want a detailed accounting of the different systems involved in commercial transactions, you can opt for a dual entry system. Double entry bookkeeping system:
This is the type of system most commonly used by the bookkeeper or an accountant in a company. The bookkeeper uses this system to maintain complete accounting details of business transactions.
This system also introduces the concept of debit and credit. Because there are many accounting systems in an enterprise, a debit entry into one of the accounting systems is usually accompanied by a credit entry into another accounting system or into several accounting systems.
Similarly, a bookkeeper may be required to make multiple debit entries for a single credit entry. The financial performance of an enterprise can be clearly determined on the basis of the accounting details obtained from the double-entry accounting systems.
Objectives of bookkeeping
Concentrate on other business priorities
Automate complex and voluminous processes
Experienced, skilled and trained accounting workforce
Best-of-breed infrastructure and technology
Get the work done in quick turn-around-time
Proficiency in a wide range of bookkeeping software
High Confidentiality and security
The average Bookkeeper salary in the United States is $42,293 as of January 31, 2019, but the range typically falls between $37,119 and $47,441.
Basically, there are two methods of book keeping. One is the manual method of bookkeeping and the other is the computerised method of bookkeeping.
Manual bookkeeping is the oldest form of bookkeeping where in the bookkeeper will be using a journal book or a ledger book to record the different accounting entries related to the business transactions. Small business owners still prefer manual method of bookkeeping as it is economical and is suitable for maintaining less complex business transactions.
Computerised bookkeeping helps the bookkeeper to perform bookkeeping of complex business transactions in a much easier and faster manner. An accounting software system is usually used to do the accounting entries. The advantage this system has over the manual bookkeeping system is in the ease of generating reports and performing calculations. Complex calculations can be performed accurately and quickly.
Bookkeeping and accounting differences
Accounting also includes the preparation of statements concerning assets, liabilities and the operating results of a business. A bookkeeper‘s function is primarily one of recording transactions in the journal and posting to the ledger, and is sometimes referred to as an accounts clerk.
Accountancy is the occupation related to accounting, and an accountant is the person who does, or at least is responsible for, the work. Accountants often specialize in a particular area of accounting such as taxes, auditing, or management.
There are two types of bookkeeping: single entry and double-entry. In single entry bookkeeping, the record of each transaction is carried to either the debit or credit column of a single account. In double-entry bookkeeping, two entries of each transaction are carried to the ledger: one to the debit side, and one to the credit side, of the corresponding account. This is so the two entries can be used to check each other.
In a small company, all of the bookkeeping and accounting tasks may well be performed by a single person. In this situation, that person would normally be referred to as an accountant.
Bookkeeping is the process of systematically recording a company’s financial transactions to show the relationship between transactions. Bookkeeping is largely a mechanical process and involves no analysis of financial transactions, but rather their registration. Accounting is the systematic recording, reporting and analysis of a company’s financial transactions. As bookkeeping involves establishing a financial record of business transactions, it is true that the role of bookkeeping is included in the accounting field and that the accounting system used by an enterprise would be part of the accounting system.
Traditionally, records were kept in a book, hence the name bookkeeping. Nowadays, bookkeeping is normally done using bookkeeping software, but the names of the books (journal, cash book, journal, and general ledger) are still used. Accounting also includes the preparation of statements about the assets, liabilities and results of operations of a business.
The bookkeeper‘s function consists primarily of recording the transactions in the journal and counting them in the general ledger; she is sometimes called an auditor. Accountancy is the profession of accounting, and an accountant is the person who does, or at least is responsible for, the work. Accountants often specialize in a particular area of accounting such as taxes, auditing or management.
Accounting is defined as “the art of recording, classifying and summarizing in terms of money transactions and events of financial character and interpreting the results thereof.” In simplest words, we can say:
Accounting is an art
to record classify and summarize
in terms of money
transactions and events of a financial nature and
interpret the results
The accounting objectives are double:
To record permanently, all commercial transactions, and
To show the effect of each transaction and also the combined effect of all those transactions during a given period to find out the profit that the company has obtained or the losses it has incurred, and also to know the correct financial position on a given date .
The necessity and importance of accounting can be understood by answering the following questions:
How much we have earned this year ?
How much was earned during the last year ?
Is our business improving?
How much cash do we have?
How much money we owe?
How much others owe to us ?
Accounting is an art of correctly recording day-to-day business transactions: it is a science to keep business records in a regular and systematic way to know commercial results with the minimum of problems. Therefore, it is said to be a statistical procedure for the collection, classification and summary of financial information.
In simple words, science establishes a relationship of cause and effect, while art is the application of knowledge that includes some accepted theories, principles and rules. Since accounting documents do not establish a cause and effect relationship, they only provide us with the procedure by which accounting objectives can be achieved, therefore, accounting is an art and not a science. Accounting is an art of recording financial transactions in a set of books; Classification into the desired categories and summary of the information for presentation in an appropriate manner to the interested persons for their benefit.
There are various systems of accounting for maintaining business records:
Cash system of accounting This system records only cash receipts and payments on the assumption that there are no credit transactions. If at all there are any credit transactions, they are not at all recorded until the cash is actually paid or received. Receipts and payments account in case of clubs, societies, hospital, educational institutes, lawyers etc. is the best example of cash system.
Single Entry System This system ignores the two fold aspect of each transaction as considered in double entry system. Under single entry system, merely personal aspects of transaction i.e. personal accounts are recorded. This method takes no note of the impersonal aspects of the transactions other than cash. It offers no check on the accuracy of the posting and no safeguard against fraud because it does not provide any check over the recording of cash transactions. Therefore, it is called as “imperfect accounting.”
Double Entry System The double entry system was first evolved by Luca Pacioliin, who was a Franciscan Monk of Italy. With the passage of time, the system has gone through lot of developmental stages. It is the only method fulfilling all the objectives of systematic accounting. It recognizes the two fold aspect of every business transaction.These questions are of decisive importance for a trader and the answers can only be derived from up to-date financial records. Only the system of keeping the perfect records of all business transactions will help the proprietor to know the amount he has gained or lost.The main objective of any business is to earn maximum possible profits with minimum expense. In view of this, a commercial organization always tries to expand its business, increase its sales and reduce operating expenses. The progress made in this regard, is always indicated only by the properly maintained financial records.
The need for an accounting system was felt by man at the beginning of the history of commerce and commerce. The art of book-keeping is as old as the art of trading.
This art of keeping records went through many phases from its inception. With the development of trade, it has reached a position of great importance. In fact, one can truly say that accounting has become the basis on which the entire fabric of modern commerce rests.
While an ordinary merchant does not have a legal obligation to maintain records, each commercial enterprise considers it essential and convenient to keep systematic records to know exactly where it is.
In addition, it is legally binding for some business forms, such as corporations, to prepare periodically, statements in appropriate forms that show the position of the company. An adequate and satisfactory accounting method is an essential part of any business for the following reasons:
If records are not maintained, it will be difficult to find a precise net gain. In such circumstances, tax authorities may overestimate profits and, therefore, a trader will suffer for not having maintained business records.
In the absence of adequate business records, it will be difficult for the merchant to present the true position to the court in case he becomes insolvent.
Maintaining adequate records helps the merchant frame future business plans and policies.
It will be difficult to determine and fix the price of the businesses that will be sold or eliminated if records are not kept.
Finally, despite the best memory, it is beyond the ability of a merchant to remember all commercial deals with previous references.
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