You may have heard about accounting and bookkeeping services being advertised on television, on the radio, and all over the internet, but haven't really had the chance of comprehending just what accounting and bookkeeping services entail. If you're a small business owner, you've probably attempted to do your own books resulting in frustration and confusion. Most people initially try to handle their own books using a single entry system. This may work in the beginning, but often leads to errors and oversights as the business grows. Read on for a quick look at a few accounting and bookkeeping services we offer and the practical benefits to letting a pro handle your books.
Bookkeeping is the act of keeping track of the financial activities of a person, an organization, or a business. When we use the term financial activity, that basically means any transaction which involves money. The goal of bookkeeping and accounting is to give concerned parties a bird's eye view of just what they, or their businesses, have been spending on, as well as just how much money came in. This leaves an overview of the business's financial health or lack thereof.
There are different types of bookkeeping, each ideal for a type of counting which one wants to occur. For example, let us talk about single entry and double entry accounting and bookkeeping.
Single Entry Accounting and Bookkeeping
As a form of bookkeeping, single account bookkeeping tends to be quite easy to comprehend, and to apply, not necessarily needing the aid of outside services. Single entry bookkeeping is simple and geared for individuals or families who would like to keep track of their expenses. Recording income, recording expenses, and current cash balance are basically the prime aspects of single entry bookkeeping. There's usually one account involved, and no need to categorize. This method is fine to use if you're a sole proprietor offering a service. There's not much to track, however, if you start to grow, things can get tricky and you'll probably want to outsource.
Double Entry Bookkeeping Accounting and Bookkeeping Services
When talking about double entry bookkeeping, the primary bookkeeping record focuses on Revenue and Expense. It allows for a deeper look and is much more comprehensive. It's similar to that of a checking account register, but differs in the sense that single entry bookkeeping allocates the income and expenses to various expense and income accounts (categories). This is when hiring a professional bookkeeper is best. Individuals who are not trained bookkeepers may allocate expenses and income into the wrong accounts. Their cash management may be poor, and they probably don't have the best idea of the big picture. Banks don't like this and not keeping proper track of every penny can hurt a business when it comes time for a loan or line of credit. The average person who is not a professional bookkeeper, also may not know exactly what they're allowed to write off, when specific forms and taxes are due, and how to discern if their business is doing as well as it could be.
To simplify things, hiring a pro to do your double entry bookkeeping stands to be one of the best investments you can make for your business. It differs from single entry in that this is something not everyone could easily (or cheerfully) accomplish.
So there you have it. The difference between two accounting and bookkeeping methods and which one you should be outsourcing. Need help with your books? The Bean Counters are ready to handle all of your bookkeeping needs!