“What is bookkeeping and how it differs from accounting?”
“Do I need only one or both?”
“Can I handle all financial records on my own?”  

For your business to be successful, it is important to stay on top of your finances. Keeping your financial data accurate and updated will ensure healthy cash flow. But, as your business grows, it gets harder and time-consuming to keep track especially when you are handling them on your own.  

The expertise of many entrepreneurs lies in sales and customer relations. Some are not number savvy. Even if they are, the amount of time and attention it requires to keep the financial records is ample. Whether you are a newbie or a seasoned businessperson, you will find the need to hire a professional to maintain your financial records. 

The first thing to figure out is whether to hire a bookkeeper or an accountant.  

What is Bookkeeping in a Nutshell? 

Following a system, bookkeeping is the documentation of all of the company’s financial activities. These include daily sales, purchases, receipts, debits, credits, payroll, and payments, among others. Their tasks are limited to recording and updating the company’s daily financial transactions on a ledger.

Valuable Skill Set and Qualities of a Good Bookkeeper 

What is the importance of good bookkeeping? Basically, anyone, including business owners, can do bookkeeping. But it doesn’t mean you should go for anybody who can count. Keep in mind that certain bookkeeping skills and qualities will be beneficial for your company’s growth, such as:

Detail-oriented

Careful attention to detail is key in delivering accurate and complete data. Small errors can have an effect on your records and your business as a whole, especially when the documentation is frequently off.

Knowledgeable in new software or technology

Bookkeepers who are adept at new business software or technologies related to accounting would prove an asset to your company. This means that they are dedicated to delivering quality service. At the same time, your company benefits from a faster turnaround and more reliable results.

Good communication skills

Financial data are typically complex. If you are not handling the books, you cannot fully understand it by simply looking at the ledger. A good bookkeeper should be able to explain complicated records in words that you can understand.

Specialization and Familiarity

You can hire a bookkeeper who has worked in a different industry but it helps if they are familiar with your area. It helps if they know what bookkeeping requires in your area, whether you are in Fort Collins, Denver, or anywhere in Northern Colorado. This will not only make their job easier, but they may also be able to analyze the data and provide reliable insights into your business’ performance. It can save you the need for an accountant.

Has integrity

There’s an old adage that says: “Numbers don’t lie but liars use numbers.” A bookkeeper’s job is purely technical or objective number-wise. Accountants, on the other hand, look at the data subjectively, and this requires analytical thinking. A person not trained to analyze the figures carefully may misinterpret them incorrectly. Also, the fact remains that they will be privy to confidential financial documents. Giving access to this information to anyone may put your business at risk.

Transparency equates to honesty. If your bookkeeper possesses this quality, they are worth sticking to. Hire someone you can trust not only to deliver excellent work but also to protect and help you grow your business.

Financial Documents Needed for Proper Bookkeeping and Accounting

There’s a heap of financial documents that bookkeepers and accountants deal with to report and analyze the company’s financial performance. But basically, they are in charge of three major records: balance sheet, income statement, and cash flow statement. These documents are dependent on each other.

There is no specific template for these documents based on state, which they should understand for your business in Fort Collins or the Northern Colorado/Denver area compared to Los Angeles or other cities.

Balance sheet

The balance sheet is used to report the company’s capital or equity, assets, liabilities, and debts at a specific time period. With this, you can see in detail how much your company owes, the shareholder’s equities, etc.

Income statement

The income statement is also known as a statement of revenue and expense or a profit and loss statement. It mainly shows the company’s expenditures and earnings over a period of time. It is one of three important documents used to determine the management’s efficiency and overall business performance.

Cash flow statement

The cash flow statement is another integral financial document that showcases how much money comes in and goes out. The income statement may look the same, but the cash flow statement shows how the company generates money for debt settlements and pays its operating costs.

Why Do You Need a Bookkeeper?

Knowing what is bookkeeping helps you realize why you need a bookkeeper. Getting one on board has many benefits for your business if you want it to succeed.

1. Smoother business process

Bookkeepers offer valuable assistance in growing a business. Ideally, the business process will be smoother if your records are up-to-date and detailed. With accurate information available to you on hand, you can make the necessary changes according to the data presented.

2. Business planning

Business planning is easier if the numbers are thorough to show you how your business is performing financially. It will help you identify the areas that need improvements, and determine how you can optimize your expenditures, as well as your earnings.

3. Better auditing

Auditing is a normal part of the business routine, but it can be painstaking when your records are unorganized and incomplete. Bookkeeping allows you to easily identify discrepancies and make adjustments if needed.

4. Good Investor Relations

If you are looking to expand by applying for a bank loan or encouraging investors to join your company, the first things they will want to look at are your books. With updated financial statements, your prospective partners can make quick decisions based on your company’s financial performance.

Bookkeeping vs Accounting: Recognizing the Difference

You are probably wondering what a bookkeeper really does, and how one differs from an accountant. From a beginner’s standpoint, bookkeeping and accounting seem similar in responsibilities, tasks, and mastery. To you, they are simply math and money experts. However, their core duties contrast in many areas.  

While bookkeepers are in charge of recording the company’s daily financial activities, accountants interpret and analyze the financial data prepared by the bookkeeper. Based on these data, the accountant provides forecasts and valuable insights into the company’s current financial status. It also helps them find opportunities for business growth depending on the trend. 

Are Bookkeepers Enough If You Are Thinking Big?     

No doubt, bookkeepers play a crucial role in operating your business efficiently. Finding a good one alone can be hard. But when you have huge business goals, are you selling yourself short by not hiring an accountant?  

Whether you are looking to grow your business or find financial opportunities within your own business, bookkeeping alone will not be enough at some point. Soon, the numbers will be overwhelming, and you will find yourself needing someone that can offer more. 

Bookkeepers will help you survive but accountants will help you fill the gaps. Your accountant should be doing more than bookkeeping–they should be a consultant and be able to analyze and interpret your numbers to help your business thrive. Work with an accountant who cares about consulting you on the right moves to make financially, and not just crunching numbers. 

Grow Your Business with a Reliable Bookkeeper 

As you think about what is bookkeeping, you may want to consider the essence of having a good accountant instead. Imagine the amount of work you have to face each day if you are juggling bookkeeping, accounting, and business growth on your own. These activities could easily throw you off focus and ruin your enterprise rather than keep up with medium to large businesses in Fort Collins or other cities in Northern Colorado near Denver.  

Having the right accountant in your stable will save you from the time-consuming task of records management and give you access to business-altering analysis. Your time will be better spent on getting more clients on board and improving your products or services.  Focus on the business side of your company and leave the numbers side to an accountant that you can trust. 

Steven J Wick and Associates, PC offers invaluable accounting and bookkeeping services, among others. The team will help take your business to the next level as their reliable assistance and expertise will make you feel confident about your company’s finances. With the team’s help, there is more room for you to make intelligent business decisions, leading to increased profitability. 

Steven J Wick and Associates also offers business consulting, CFO, tax, payroll services, and Quickbooks accounting, among others. If you are determined to fulfill your business’ vision, mission, and goals, give us a call to learn more!