Many people believe the terms “bookkeeping” and “accounts” are interchangeable, but this is far from true. Accurate bookkeeping is an essential part of any small business’ operations if they want to achieve success. It’s quite normal for start-up owners to assume the role of bookkeeper for their small business, but, as a company grows, outsourcing this job to a professional can be advantageous.
In the following sections, we’ll explore how bookkeeping differs from accounting, what work is involved and the type of records the two roles make. We’ll also look at which of the two services might be more appropriate for your firm. Read on for all you need to know about small business bookkeeping.
Accounting and bookkeeping – what’s the difference?
As mentioned, accounting and bookkeeping are terms commonly used incorrectly. Essentially, bookkeeping is only a small but exceptionally important part of a company’s accounting. It’s the process of actively recording and then reporting a firm’s financial data. Accounting, on the other hand, is the process of employing this information to establish a company’s financial situation and to make decisions on how its finances are effectively managed.
In brief, a bookkeeper records and reports financial information, and an accountant will analyse it to form a financial strategy.
What does a small business bookkeeper do?
A small business bookkeeper manages the daily finances of a firm, including making necessary payments and chasing customers and clients to pay invoices. Bookkeepers also ensure firms pay the correct tax to HMRC and claim any expenses back. When a small business has staff, bookkeepers may manage payroll and ensure employees are paid properly.
Bookkeeping basics
A small business will, at a minimum, require certain record books that are vital for accurate financial reporting and supplying important information if audits are necessary. While your business may use more, there are three basic financial records designed to track payments.
Firstly, a cashbook will record overall cashflow – this means all funds moving either in or out of your company account. Secondly, a sales invoice will record what your business has sold, and this will include invoices that are unpaid or have been paid. Finally, a purchase invoice will record any goods or services you have bought, with how they were paid for itemised alongside.
Does your small business need an accountant or a bookkeeper?
For a small operation, a bookkeeping service may seem more urgent initially compared to hiring an accountant. However, if you opt to outsource your accounting, payroll and bookkeeping can often be included within a single service. Using certified accountants can often provide peace of mind that your finances are in professional hands, allowing you to focus on expanding your small business.
Small business accountants for South Yorkshire
Whether you need a professional bookkeeping service or an experienced accountant for your small business in South Yorkshire, we’re here to help. At Adaptive Accountancy, we create bespoke packages for our clients, providing them with all the services they need to expand their enterprises. If you’ve outgrown handling your own bookkeeping and you’d like to discuss your accounting needs, get in touch today to explore our expert services.