ACCOUNTING AND
BOOK KEEPING
Accounting is the process of tracking income and expenses. An
accountant is responsible for offering strategic financial advice in addition
to being aware of the company's financial situation.
Book keeping services is the process of keeping records of financial
transactions and preparing financial statements, such as balance sheets and
income statements. In day-to-day operations, a bookkeeper would make sure
employees are filing invoices and expenses correctly and handling payroll.
In this lesson, we'll go in-depth on accounting and
bookkeeping services so you can make a decision on whether you can handle the
tasks yourself or need to hire someone.
SERVICES
A bookkeeper is the official record keeper of your business's financials.
An accountant is your financial strategist. This professional is responsible
for preparing for audits, helping you with tax planning, and offering business
financial analysis and advice.
Accounting and bookkeeping services can be handled by one individual but
before you make any decisions, find out what each task typically involves.
BOOK KEEPING
Keeping clear business records is important. It helps you understand how
much money is owed to you, how much you owe and will prevent you from making
costly – not to mention illegal – errors. It can also help you monitor your
business and identify sources of income.
Below is a list of records that you should keep
accurately and orderly:
Ø Payroll and employment taxes
Ø Sales and purchases
Ø Expenses
Ø Bank
statements
Ø Profit
and loss statements
Ø Cash
flow analysis
Accounts receivable and accounts payable are also two
important records to keep.
Accounts receivable is a claim from an uncollected
amount, usually from a sale on credit. For instance, a sale has been made but
the money hasn't been collected – only credited.
Accounts
payable is an amount owed to a vendor or credit for completed
goods or services. For instance, a small business might have short-term
payments to banks.
The official
website of the IRS has more information on recordkeeping.
TAX PLANNING
Tax planning and filing isn't fun
but it's crucial to make sure everything is handled correctly. In addition to
reducing filing errors and preventing unnecessary audits, an accountant can
help you save money. Because it's their job to stay up to date with tax codes
and regulations, they'll be able to advise you on how much money your business
needs to put aside – so there aren't any surprises.
AUDIT
Before you freak out – an audit isn't always bad! The dreaded "IRS
audit" occurs when a business isn't filing their taxes correctly. However,
it's also pretty standard for a business to be audited when a bank or investor
wants to understand its financial position to determine the risk before they
invest capital.
When it comes to preparing for any audit, your accountant can be your
best friend because they'll save you loads of time preparing for the audit.
To prevent your business from getting "the bad audit", here
are some tips to follow:
v File
and pay your taxes on time
v Don't
incorrectly (or forget to) file business sales and receipts
v Don't
report personal costs as business expenses
v Keep
accurate business records
v Know
your specific business tax reporting obligations
v To gauge the income and
expenditure of the business
v To ensure smoothness and transparency, every individual, firm, or corporation must know about the income generated and expenditure incurred. This helps them to plan and strategize their financial resources and exploit them accordingly.
v Timely access to
operational information
v Up to date records provide access to operational information at any time to management. Since business owners or managers are not directly associated with all transactions, accounting and bookkeeping will help them to keep an eye on all the activities from time to time.
v Regular reconciliation
rationalizes decisions
v Monthly or quarterly reconciliation of data helps the management to analyze the beneficial or detrimental aspects of a business. Accounting services come with the additional benefit of periodical reconciliation of data. Hence, future decisions can be rationalized after analyzing the profit and loss.
v Attract investors with
accurate financial statements
v Investing in any business is followed only after a complete analysis of its financial condition. While approaching investors, you need to make sure that your books of accounts are up-to-date and accurate. Inconsistency in financial statements may refrain investors from jumping into your business.
v Ready to furnish data
for timely compliance
v Accounting makes it easy to extract data and submit it on time for regular return filing, compliances, and scrutiny of any business.
v Documents required for Accounting and Bookkeeping Services
v Company / Business Incorporation Documents
v Bank statement of a financial year or monthly statement (with remarks)
v Purchase-Sales invoices, if any
v Expense bills, if any
v Any receivable and payable detail
v Any other Government registration taken
v Cash Expenses
v Bank Statement of partner/ members with remarks if used for business transactions
v Expenses made for company or LLP
registration by promoters