The financial tasks of a business are handled both by bookkeepers and accountants, yet, when we are required to outline the differences between the two, it generally is a hard one. The fact is, that their goals and ambitions for the business are the same, but the way they achieve them are different. In a simple sense, bookkeeping is primarily concerned with transactions while accounting deals with the insights that are drawn on the basis of the information obtained through bookkeeping.
If you are a small business owner and are wondering, “how exactly are the two different?” and what is the right choice for your business, then you have come to the right place! In this blog we will outline all the differences between an accountant and a bookkeeper and how each benefits and adds to your business.
What is Bookkeeping?
Bookkeeping as a Financial task in a business, records the daily transactions that occur in a business in a standardised and regularised manner. It forms the base for any other financial function of an organization. Their tasks include:
- Recording Financial Transactions
- Assessing the Debits and Credits of a business
- Generating invoices and handling a business’ receivable funds
- Maintaining the General Ledger
- Organizing and administering payroll
Out of all the tasks mentioned above, maintaining the general ledger is of the prime importance. This is where all the transactions are recorded. How dynamic and complex an organization’s bookkeeping is, is primarily dependent on the size and stage of operations that business has.
What is Accounting?
This is the advanced financial task that works on the information and insights provided by a bookkeeper. This information is then used to draw future budgets and forecasts and other such financial models. Some of the tasks that are primarily typical to accounting include:
- Reconciling and entries that are mistakenly omitted.
- Financial Preparation statements, records and reports.
- Analyzing operational costs
- Completing, preparing and filing tax returns
- Draw the financial blueprint of a business.
It is an accountant that draws the key financial indicators of a business and determines an analysis of the cash flow.
Therefore, it is an accountant that takes the information in the General Ledger provided by the bookkeeper and takes it forward to the larger insights drawn through those recordings. Where bookkeeping ends, accounting begins.
Accountant vs Bookkeeper
The work of an accountant and a bookkeeper are often seen to be overlapping. In fact, some can say that bookkeeping is a sub-task of accounting only. The only difference is that bookkeeping is a financial operation that needs to be undertaken on a daily basis and is regularized. Therefore, it is imperative to do it in its regularized manner. Only, when this is done accurately, can an accountant work on the information provided by the bookkeeper.
Records the financial transactions that occur in the business.
Work on the financial transactions recorded to provide broader insights.
Recording the debits and credits of a business.
Curates the financial statements, records and reports.
Generates invoices, sends them ahead and tracks payments.
Prepares taxes and files them.
Maintains the general ledger.
Uses the general ledger to prepare financial analysis and strategy to support the business.
Administering Tax strategies
Determines where a business is standing.
Determines where a business is headed to.
Financial record keeping in a business
Financial forecasting and overall financial administration of a business.
What Do You Need For Your Business?
Now comes the burning question. What do you need for your business? An accountant or a bookkeeper? Before you ask yourself that, try assessing answers to the following questions:
- What industry is your business in?
- How large are your operations?
- How many employees does your company currently have?
- What is your business’ goal?
Why these questions are necessary is to make you understand where your business is currently standing and where it is headed to in the future. Now, the fact of the matter is that a bookkeeper and an accountant are co-dependent and cannot exist without one another. Additionally, it is always a perk to have a team that can handle both. Not only does it help save costs, but it also leads to better accuracy, more coordination and an overall synchronization of timely deliveries and compliances.
Another lucrative option that businesses have these days, is the option to seamlessly integrate the tasks of an accountant and a bookkeeper, by outsourcing these activities to a bookkeeping service provider. What your business thus gets, is:
- A team of expert bookkeepers and accountants.
- Someone who can handle both administrative tasks like payroll and financial tasks like taxing effectively.
- Increased cost and time savings.
- Savings on overhead and operational costs.
- State-of-the-art accounting technology and tools.
Now is the time to get better control of your business’ financials by outsourcing it and gaining the expertise of industry leaders. No matter the stage and size of your business, it is never too late to have the professional support of ace bookkeepers and accountants on your side.
No one ever said that running a business would be easy. In fact, it is one thing to run a business, and it is a different thing to be able to keep up with the changing times and by responding to it with scaling up and evolving your business. A business is only as good as the efficiency it is run with. The time you put in it, the resources you foster it with and the team that is behind making it a success.
A profitable business is always the one that has impeccable logistics and operations. Because when you are able to micro-manage your business well, then you are able to take care of the larger picture of making profits and expanding operations.
When talking about bringing efficiency in logistics, what comes on top of the list is accountancy and bookkeeping operations. When your business is small, it is easier to manage its finances. But as it starts to grow, you are caught up in handling the sales, marketing, expansions and slowly the financial management starts being a hassle and ends up being ignored.
This is where virtual accounting comes in the picture. Their team of expert professionals help take off the load of your operations and prioritise your tasks.
How Virtual Accountant Helps Your Business?
Virtual Accountant is the game-changer when it comes to streamlining and organizing your business logistics better. Here are some of the benefits that your business can avail by choosing virtual accounting services:
Get Your Financial Reports When You Need Them:
The most important part of knowing where your business is situated at present and where it is headed to in the future are through financial documents. It is important to have updated, accurate and consistent documents. A virtual accounting firm, will help you in formulating updated financial documents to help you take care of the daily operations of your business and to run it efficiently at the tip of your fingers.
Also Read – Management Accounts for a vendor operating several stores
You Will Not Need to Hire and Train a Team:
When you have a team of dedicated and expert virtual accountants, then you no more have to find a team of qualified accountants, or train them. Because, virtual bookkeepers only hire the best in the business. Adept with all the highest certifications and qualifications. This helps you save time on finding the personnel that will fit the bill for your business.
Get Balanced and Updated Books Everytime:
You will no more have to face the wrath of the year-end stress, as your team of virtual accountants will make sure that you have accurate, updated and error-free books throughout the year. Your records will be reconciled and available in an understandable fashion at all times.
Help Your Business Get Better Work Management:
When you have time savings from not having to handle accounting tasks for your business, you will be able to delegate that for the betterment of the management and expansion of your operations. You will be able to take care of your business and run it efficiently.
Save Upto 50% Off Your Annual Accounting Budget:
With virtual accounting you will be able to save on the overhead charges of having an in-house accountant. Your cumulative savings on salaries, tax benefits, rentals and the added opportunity costs will help catapult other areas of your business. As with virtual accounting you only pay for the services that you avail for.
Gain Convenience and Flexibility:
The convenience of having a team of expert professionals available to your business around the clock will give you added flexibility. Because a growing business is dynamic and its needs can arise at any time, therefore, having a virtual accounting service will help you with your financial needs 24×7. Also, they grow as you grow and help in scaling up their services as you scale up.
Virtual accounting services is a one-way ticket to increased profit and for added peace of mind. With the evolution of how businesses are done, virtual accounting is the way to an organized future for your business. No matter the size and stage of your organization, virtual accounting will help you ace every sphere of your business’ logistics and operations.
We hope that through this blog, you will be able to find one of the many ways in which virtual accounting can help benefit your business. Get on with financial trend of the future, opt for virtual accounting services.
No matter the field of business you are in, the challenges and competition are at an ever-high. With the changing dynamics of the market, it is important to have a clear strategy for your business management, accounting advisory and bookkeeping schedule. If you do Dental Practices, and are looking for ways to organize your accounting and bookkeeping practices, then you have come to the right place.
Healthcare is a growing industry and Dental Practices form a core of that. Being a part of this complicated business environment thus requires impeccable accounting and bookkeeping patterns, so that you can benefit from the accurate and dependable numbers to sustain and expand your business in an informed manner.
Here are some of the essential tips and tricks that can make your dental accounting practices shine!
Tip No. 1: Introduce Cost Cutting
Now, there is no rocket science to how this as a step in itself makes your profit margins fatter! It is important that you sit down with your accountant and assess the areas that are dispensable and where you can optimize your costing. Cutting these extra expenses will help you organize your actual required costs much better.
Doing it yourself, is not the way to go! Having a professional who can assess these arenas see where there can be a deduction of taxes, or reduction in equipment & medical costs can be done.
Tip No. 2: Ensure that You Know Your Accounting Basics
As we said in the tip above, bookkeeping is not a task that you should reserve for yourself in your busy dental practice.. But having said that, it is still necessary for you to have a basic knowledge of accounting terms and practices, so that you are not completely detached from what is happening with your books and can absorb accounting advice fully. A simple thing like knowing the difference between profit and cash flow is important. Where lack of cash can lead to a deficit in funds to undertake your daily operations, your profits are the excess of funds left, after you have met with all your expenses. When you have a proper knowledge of terms like these, you are able to avoid confusion and losses.
Tip No. 3: Seek Assistance from an Accounting Software
Accounting has become more streamlined and organized with the accounting softwares that are there to make the job easier. Having the right accounting software for your business, can help you and your bookkeeper communicate in a transparent manner, help you keep all the financial information you need in one place, and make the loss or theft of data impossible. Save time and gain efficiency by having the right balance of a modern accounting software and a bookkeeping team that knows the industry accounting needs of your business.
Also Read – 10 Ways Your Bookkeeper Can Help You Through Covid-19
Tip No. 4: Have and Accountant Who Knows Your Business
Accounting is a universal knowledge, its basics remain the same wherever you go and whatever you do. But what does change, is the way you apply its principles to maximize your client’s benefits. Especially in a dental practice, where no matter you have a stand-alone practice or a chain of clinics, having an accountant who knows your business and its industrial needs to the ‘T’ is necessary. This significantly reduces the chances of errors and is successfully able to handle your business efficiently.
Tip No. 5: Organize Purchase Costs
Dental Practices are required to stay modern and up-do-date with the latest medical technology that is there in the market. By default, it makes the largest cost bracket of your practices, therefore you need to pay extreme attention to it. Sitting with your accounting and analyzing these expenses to understand how you can optimize them and maximize the benefits from your expenses is a must!
Tip No. 6: Check for Internal Issues
If you are to take care of your business, and there are some people in your organization who punch in daily transactions before it goes to your bookkeeper, chances are that there can be errors, or potential frauds. It is important for you and your bookkeeper to keep a vigilant eye on all such practices, so that you can be safeguarded from any such financial threat and malpractice.
Dental practices are ever-important and one of the leading professions globally. With the volume of work it has, keeping up with its bookkeeping and accounting needs is also necessary. Keeping a tab on necessary accounting principles and the primary do’s and don’ts help you assess your business model better and make necessary alterations for increased profits and decreased errors. Having the right accounting team who understands the needs of your industry is the first step in that direction of accounting efficiency and an enhanced financial health.
Read estate becomes doubly complicated as a business when you add the intricacies of property accounting to it. Being unmistakably accurate is important as a single mistake can tarnish your long-standing reputation. If you know what to look for, then chances are you will be able to avoid those mistakes right from the start.
Let us look into all the common property accounting problems that you can face, and their solutions to help undo any deterrents in your accurate and updated bookkeeping.
Problem No 1. Separate Business and Personal Records
A common property accounting mistake, which also a generic accounting error, is the mixing of your business and personal accounts into one. This causes immense financial confusion and is not good for the financial health of your business. Also at the time of filing taxes, differentiating between the two can be hard. To avoid such a confusion and to be able to get through your taxes smoothly, it is important to differentiate between the two right from the starting.
Problem No 2. Not Waiting For a Transaction to Complete
In real estate transactions it is common that the disbursement of trust or escrowing deposits before the transactions are completed in real estate. Doing so may cause your brokerage to being non-compliant with the governing body. The main reason for the same as that funds are not considered earned and as revenue, until the deal is closed, the transaction is complete and the property is sold completely. In case this protocol is not followed in the above given manner, then all these transactions need to be revisited by your bookkeeper, which in turn wastes time and effort additionally.
You May Also Read – Top 5 Things You Need to Know Regarding PPP Loans Amidst Covid-19
Problem No 3. Not Having the Right Professional Staff
If you have a team backing your financials who are not experienced professionals then all the hard work that you are putting in your books goes to waste. An inexperienced staff will not be able to successfully handle your account management as they will not be able to understand the industry requirements of your organization and the several federal and state compliances that apply. Therefore, the most important thing is to have a team of accounting advisors and bookkeepers who are aware of the nitty-gritties of your industry and therefore can come up with the best strategic bookkeeping plans for your business.
Problem No 4. Not Taking Taxes Diligently
The tax filing process and its preparation is equally important as doing all the work that goes into it prior to it. Therefore, a common mistake made in property accounting is not following the right filing process and compliance protocols that later have grave consequences. By regulations, you can either use the accrual or the cash method to file your taxes, but this should be attempted to be followed diligently each year. Once you have come to that consensus, you should attempt to stick to it. In such a manner, you will not only be able to reduce your tax burden at the end of the financial year, but you will also get a lot of extra time at hand due to the increased organization.
Problem No 5. Not Taking Backups of Your Files and Data
This is a generic accounting mistake that can affect any business. Gone are the days when businesses used to carry bulks of files and paperwork with them. Now, with the efficiency of cloud-based accounting and digital backups, you can store all the necessary information on virtual interfaces, without having to pay the overhead charges of storing it. You also are able to maintain the safety and protection of this data much better. Additionally, you might lose on some essential information and records, if you have not backed them up effectively. Therefore, it is ever-important to have regularized and standardized backups of all your accounting information from time to time.
Running a business has its complexities, but taking care of your accounting need not be one of them. With the right accounting strategy, a team of professionals and an untiring concern to avoid common bookkeeping mistakes, you can avoid all accounting hindrances and ace the tax season!
Accounting in the year 2020 is more than just crunching the numbers and availing maximum tax benefits. It is about going ahead and overcoming the major challenges faced by accountants that are hindering you from achieving your goals. The failure to see these and acting on them promptly, not only affect your profits, but derail you from your path of efficiency.
This blog is a round-up of all the challenges and industry forecasts for the year 2020, and how you can act on them today, and secure your accounting practices with a clear and promising future.
Accounting Challenges Faced by Accountants Today:
Keeping Up With the Changes in Tax Regulations:
Tax compliance and maximising client benefits is the base task for any tax accountant. But the constant changes in taxation are making the need to keep up with the updates, more important than ever. Whether it is to do with regulations, client benefits, revenue generation, etc. or more complex changes, failing to abide by which can lead to errors and monetary fines. It is very important to be up-to-date with the current tax regulations and constantly be updated with any changes occurring during the financial year.
Repetitive Tasks Everyday:
As an accountant, there are chances that your daily task sheet almost always involves the same tasks in a clock-work manner. The excitement of variety or differing accounting challenges in your job is absent as an accountant. Additionally, when there is a monotony of tasks then there are chances for lack of interest and soon the creeping in of errors.
On an average an accountant works an average of 80 hours a week. And when it is the year-end, this work time almost always escalates. This leads to an exhaustive work-life balance, where you are almost always bundled under a pile of files. Not missing the need to still be innovative, vigilant and active for each of your clients. It is imperative to have a reliable back-end team as an accountant, with whom you can delegate your tasks effectively and reduce your work stress.
Increasing Competitiveness by the Day:
Accountancy is a swelling field with new entrants coming in each quarter. Now, with more candidates comes more competition. No matter your certifications and qualifications, each accountant is having to compete and race with an exceeding number of competitors in the field. Therefore, the need to have a typical niche and an edge that makes you more competent and different from your competitors is the need of the hour.
Also Read – Different Branches of Accounting: What Are They and How They Work
The Training is Never Over:
The reality of being an accountant is that you never really finish your training. There are always more certifications, qualifications and the unending need to be updated with changes in tax regulations. As an accountant, you almost always continue to train yourself in the span of your career. It is important to always be updated with refreshed knowledge and continuously evolving with new techniques and the software support in your field.
Accounting is a career that is bound by dates and timelines. Missing one by error, snowballs into multiple adverse effects, fines and troubles. Not to miss, the loss of your integrity, market value and your valuable clients. Therefore, as an accountant it is of utmost importance to understand the importance of these deadlines, abide by them and organize your work in a way that you are always ahead of your schedule. It is important to have a strong back-end team that can either ease this organization for you or come on-board and share your swelling responsibilities to ease you down.
Automation and AI Taking Over Traditional Accounting:
In the wake of increasing business competition, accountants are now having to compete head to head with holistic accounting softwares and AI support. It has not only brought convenience for your potential clients, but has also led to the recurrent need to understand and ace these software. The only way to get over this challenge, is to be able to understand and gain expertise on these innovations or have a team of individuals who can aid you in this field. So that you will be able to get more support and increased client satisfaction in your career.
Accounting forms the base task for effectively running any business. It is an omnipresent need of any organization, no matter how big or small it is. But behind all these truths, is the ultimate fact that accounting as a profession is not a cakewalk. There are multiple accounting challenges, problems and recurrent issues that are faced by accountants on a daily basis.
However, proper management, meticulous planning, and the right team can get you ahead of these problems and make life easier for you. Meticulous streamlining of your profession and having the right strategization can help you in taking charge of your business better. It’s time to pull up your socks and get ahead in your business with the right knowledge like never before!
Covid-19 has brought the economy to a halt. The global Lockdown have made it almost impossible to churn the vehicles of the economy and its revival in the future is also something that is dependent on how fast we can fight the pandemic. The IRS has come to the taxpayer’s rescue and has come out with a series of benefits, protective regulations and tax relaxations to ease everyone during these times of uncertainty.
Predominantly, all the tax deadlines that were pending for the financial year 2019 and were falling from April 1- July 15, have been extended to July 15, 2020. A list of relieving measures have since been taken to reduce stress and financial burdens during Covid-19. Additionally, individuals who still cannot adhere to the July 15th Deadline can again ask for extensions from the Department of Treasury and the IRS.
Who All Are Eligible for the New Tax Deadlines?
The new tax deadlines are applicable to all taxpayers, whether they are individuals, freelancers or filing for self-employment taxes. These umbrella relieving measures are applicable to everyone. There is no need to file for the acceptance of this relaxation of deadlines. All the taxpayers are automatically eligible for these new IRS tax relaxation deadlines.
You May Also Read – Ways to Maximize your Tax Benefits During Covid-19
Does This Relaxation Depend on All the Taxes?
Almost all the IRS tax deadlines that fell under the umbrella dates of April 1- July 15 have been an extended relaxation date till July 15. Although, it is important to note that there are differences in how the different states have responded to these IRS deadlines. Here are those below:
|Arizona, Arkansas, Connecticut
||Announced plans to end this year’s regular legislative session.
||Announced Special Sessions to Be Held at the End of the Year.
|California, Delaware, Kansas, Maryland
||New Revenue Forecasts Have Been Announced in These States.
||April sales tax deadlines have been extended to May.
||The Budget for the Financial Year 2021 has been Proposed.
||Legislative Administration Has Further Been Postponed.
||Veto Power Has Been Postponed Indefinitely.
||Spending in the Financial Year 2020 Has Been Frozen.
||Bill Has Been Enacted to Codify the Income Tax Extension.
||The Board of Equalization has Officially Announced Revenue Shortfalls, and Will Make Use of Any Rainy Budget to Fill the Gaps.
||Legislators Will Not Be Filing the Budget For Financial Year 2021 Until August or September.
||Biennial Budget for Financial Year 2021, 2022 Has Been Put in Effect.
||Taxpayers Who Are Applying For a Tax Waiver, May Avoid the Payment of Cannabis and Alcohol Excise Taxes.
|District of Columbia
||FY 2021 Budget to be Presented on May 12. The Rent Has Been Frozen On Commercial Tenants as Well.
(All Information Updated As Of April 23, 2020)
How to File For Extension Beyond July 15, 2020?
If you need to file for an extended relaxation that goes beyond the July 15th extension, then you need to follow the steps below.
1. You can seek an extension by filing Form 4868.
2. Businesses who need additional time need to file the form 7004.
The IRS and the Department of Treasury are taking multiple measures to ease citizens and businesses during these times of uncertainty. Tax Relaxation Deadlines to July 15th 2020, is one of the measures to help relax this economic slowdown. The IRS continually comes out with recent updates in the changes that are occurring and any new relief measures that are being taken. You can click here to know more.