Experiencing steady, consistent growth is the goal of every company. Businesses plan annually to make strides toward scaling up operations, hiring new employees, and earning more revenue. However, one aspect that often gets overlooked as companies expand is the need for accurate financial planning in order to make the most of the strategies they put into place.
Some companies utilize a bookkeeper. Others try to stretch their accounting budget to cover their needs, when instead, they should be scaling their accounting staff in proportion with their growth. For some companies, utilizing in-house accounting departments to guide their actions on financial matters is a preferred route (though it can be costly.)
In this post, we are going to highlight key differences between accounting and bookkeeping and share why companies that want to succeed for the long haul need to prioritize both.
How Are Accounting and Bookkeeping Different?
Before deciding whether bookkeeping or accounting is the right financial service for your business, you should take into consideration what each of them entails. Many business owners make the mistake of assuming that bookkeeping and accounting are the same, when in fact they are not. Each discipline has a distinct set of actions, resources, and support that help provide the information needed for a well-rounded financial strategy, and both are pivotal to a healthy business.
Bookkeeping
Bookkeeping refers to the collection of data and numbers that impact your bottom line and is the baseline for decision-making. Ensuring data is recorded correctly and in a timely fashion is essential for accurate financial statements and records – which is the bedrock of any successful business. However, what you may not realize is that as your company grows, bookkeeping can quickly become a full-time job making it challenging for owners or executives to focus on the other parts of the business.
Bookkeepers record important information such as customer transactions, revenue, payroll, loans, interest, and operating expenses for a set period of time. The data is then provided to the accounting team so that they have the information needed to do their part.
Accounting
Accounting looks at the bigger picture. Instead of tracking financial data, it moves the marker one step further by analyzing and preparing financial statements and reports. This work is often used as a snapshot of where the company is at financially and helps organize the data in a way that is easier to understand. These reports are then provided to various departments to help them make sound financial decisions based on the numbers. Think of the accounting team’s work as a means for helping every department in the company run more efficiently.
How These Services Combine
Without bookkeeping, accountants wouldn’t be able to assess and summarize a clear picture of a company’s financial health. Likewise, without accountants, bookkeeping wouldn’t be as necessary because the data being recorded wouldn’t be analyzed and organized into reports. To ensure you have the data needed and the best financial snapshot of your company, both bookkeeping and accounting disciplines are required. Think of the combination as the intersection between planning and actions that work together to help drive the decisions that impact the business.
Outsourced Financial Services
To effectively combine the powers of bookkeeping and accounting, an outsourced financial service firm can help your company to see the bigger picture. Since objectives tend to vary between departments, an outside perspective can help make sure that your business is moving collectively toward your goals.
For every business decision, there are several financial factors that must be considered. Outsourcing to an experienced accounting firm that can guide your company with dedicated support and expertise will help you save time and allow for better-informed decisions.
Your company can also rest assured that there is a system of checks and balances in place. This ensures that theft, mishandling, and costly mistakes don’t occur. Leaving the tough decisions in the hands of trusted experts can help to provide your company with new financial insights and help you plan for a better financial future.
Partner with Tentho for Bookkeeping and Accounting Services
Tentho’s team of bookkeeping and accounting experts specialize in helping clients outsource their financial management, maintain accurate records, and implement sound financial strategies. Tentho works with you to make informed decisions for your business by utilizing knowledgeable experts and proven accounting methods combined with technology.
If you are ready to learn more about outsourcing your accounting to a team of financial experts, schedule a complimentary consultation.