Bookkeeping Archive

John Dixon asked:




What is the difference between bookkeeping, accounting, and accountancy? When someone says they are an accountant, are they really a bookkeeper? Does it really matter?

Bookkeeping

Bookkeeping is the process of systematically recording the financial transactions of a business, so as to show how the transactions relate to each other. Bookkeeping is largely a mechanical process and does not involve any analysis of the financial transactions, but rather the recording of them.

Traditionally, the records were kept in a book, hence the name bookkeeping. These days, bookkeeping is normally performed using a bookkeeping software package, but the names of the books (daybook, cashbook, journal, and ledger) are still used.

A bookkeeper’s function is primarily one of recording transactions in the journal and posting to the ledger, and is sometimes referred to as an accounts clerk.

There are two types of bookkeeping: single entry and double-entry. In single entry bookkeeping, the record of each transaction is carried to either the debit or credit column of a single account. In double-entry bookkeeping, two entries of each transaction are carried to the ledger: one to the debit side, and one to the credit side, of the corresponding account. This is so the two entries can be used to check each other.

Accounting

Accounting is the systematic recording, reporting, and analysis of financial transactions of a business. As bookkeeping involves making a financial record of business transactions, it is true to say that the role of bookkeeping is encompassed within the scope of accounting, and the bookkeeping system used by a business would form part of the accounting system.

Accounting also includes the preparation of statements concerning assets, liabilities and the operating results of a business.

Accountancy is the occupation related to accounting, and an accountant is the person who does, or at least is responsible for, the work. Accountants often specialize in a particular area of accounting such as taxes, auditing, or management.

In a small company, all of the bookkeeping and accounting tasks may well be performed by a single person. In this situation, that person would normally be referred to as an accountant.

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Sukant Senapaty asked:




Outsourcing of business processes has acquired a strategic importance in every company’s menu, particularly in this scenario of economic slowdown and escalating cost. But more than the decision itself, what matters most in outsource of critical functions like accounting is “How to get started”?

The following “best practices” should be taken into consideration to ensure a better launch for the company in outsourced bookkeeping process:

1) Deciding on what to outsource: The key precursor to enter into an outsourcing arrangement is to know which aspect of the bookkeeping process needs to be outsourced. Bookkeeping is a complex job and involves much aspect. Companies can outsource process like account receivable, account payable, reconciliation or the entire of bookkeeping process. Chief factors those should facilitate decisions are size and stability of the process, availability of resources and skill and the savings company expect to garner.

2) Finding a reliable service provider: The most important aspect of the entire process is to locate the service provider. The simplest way to find offshore service providers is to go for search engine or relative online directories. Once a prospective vendor is located, time and efforts should be spent in checking their credentials. The process involves speaking to the vendors, finding out about their management, checking on the references provided by the vendor etc. It is very important to establish that both the service provider and the company share the same corporate culture. Companies that are culturally compatible viz. share the same ideals and goal is like to be more successful in eking out a long term outsourcing relationship.

3) Contract Finalization: At the heart of every outsourcing deal is a contractual agreement that defines how the client and the supplier will work together Since the documentation of contract lays the foundation of an outsourcing process, optimum care should be taken while drafting it. An outsourced bookkeeping contract should cover the following areas:

> Minimum service levels.

> Security of data

>Roles and Responsibility of both the parties.

>Pricing.

>Staff to be deputed, skill levels, hours of work etc.

>Exit Strategy.

4) Smooth Transition: A smooth transition process is the key to a successful outsourcing process. A detailed project plan by both the vendor and the customer should be prepared outlining a list of known issues, assumptions, constraints, risk factors, identification of personnel, assigning of responsibility etc. Proper and secure method of data transfer and clear service delivery models should be developed. Companies need to open a two way communication process to minimize mistakes that are bound to occur in the beginning stages. In the initial stages, the outsourcing relationship needs time and attention. It is essential for the sake of advantage of both the parties to manage the relationship as a partnership, not as a company-vendor contract.

5) Evaluation of results: On the completion of a project, a careful evaluation should be done for assessing whether outsourcing the bookkeeping project is proving feasible for the company. A proper evaluation will also dig out possible pitfalls in the outsourcing process. And steps can be taken to improve it.

Off shoring of bookkeeping has it own advantage but a company should always practice caution and patience from selection of partner till the execution of an assignment to make the entire process suit to its need . By following the afore mentioned guidelines a company can get better start into the process and definitely experience better outsourcing results.

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Jo Alelsto asked:




Running the financial structure and dynamics of a company is not an easy responsibility especially if you are the manager or the owner. This is because the prime task of manning and supervising everything is on your shoulders. Basically you need someone who can do the task for you and not just anybody but a staff with a comprehensive background and reliable performance.

The benefit of having a bookkeeper is unquestionable and virtually all businesses, small or big, have an assistant or staff who does the tedious task. Going to the details of preparing financial reports and daily financial transactions within the company is not supposed to be done by business owners themselves because such task would take much of your time that is supposedly expended on your core function as the head of their game.

Bookkeepers do the job of putting into record daily financial transactions. This data is crucial when making regular decisions. Key decisions like what to spend on and how much resources a company can spend may depend upon what accounting record a bookkeeper presents.

In addition to preparing and presenting reports, another important task is to keep and maintain such records. With the tough schedules of owners, there might be no time left for such a routine duty. In this case, an assistant can help you with this need.

Small and large business have recognized the utmost significance of accounting and bookkeeping, which are two of the very vital functions within the company that must be strictly supervised and monitored. All business owners would want to see accurate information as much as possible because the path of their decisions depends upon what figures come out of the accounting reports. What bookkeepers show gives a hint as to how the company is using up its resources and what the company is spending for.

Data accomplished by a bookkeeper may be turned over to a company accountant who does thorough financial reports, balance sheets and income statements. Thus it is quite necessary for a bookkeeper to perform precise recordings beforehand. This is critical because such financial data give a clue on whether the company is earning or not. Making records and evaluating them are tedious tasks that require expertise.

While you wait for an accounting clerk to step into your office, why not look for accounting firms that offer bookkeeping services? Lots of these firms have online pages you may view. Get acquainted with their services and decide whether you are hiring an in-person assistant or an online/remote assistant. Many businesses have been opting for the latter because of convenience, no less.

With a competent assistant from a reliable accounting firm, you can ensure that your financial records are at good hands and you can simply go back to your prolific duty as the head of the business. With appropriate keeping of records, you actually save time and monetary resources.

A bookkeeper follows up incoming cash and checks, integrates the business checkbook, and takes note of bills. He also looks over payroll taxes and records account receivables.

If you are looking for the right bookkeeper, go over his or her scholastic background. Trained accountants make the most dependable assistants for this purpose. Nevertheless, somebody who keeps track of financial transactions need not have finished accounting in college. Then again it pays off to hire somebody with formal education in the respected field. The professional experience cannot be ignored, too, since you want somebody with a considerable experience in the field. Personality and good communication skills are two other qualities to check. For instance, you do not want to hire a record-keeper who does not make good rapport with you or who does not know how to explain his or her data.

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Joseph D Rose asked:




Bookkeeping is an important part of any business. It is important because from it, a business owner can gather information on how the business is doing. A small business owner is not exempted from keeping financial records of the company. She can do it herself. She can hire a full time bookkeeper. Or in common practice, one can outsource it to an accounting firm that offers bookkeeping services.

Bank reconciliation is one of the bookkeeping services that an outsourced bookkeeper can perform in a small business. It is a document that explains the difference between the cash balance as per the bank’s monthly statement of account and the company’s cash balance as per its books at a particular date, usually the end date of the statement of account. This is an important activity to check for errors in posting in both bank and company’s records.

Trial balance sheets are also one of the bookkeeping services that the bookkeeper must perform. A trial balance is an accounting worksheet that is used to check for the mathematical correctness of the accounting balances. This document can help the business owner in decision making.

One of the bookkeeping services the bookkeeper is required to render is the preparation of financial statements. These accounting statements are used only for internal decision making purposes. The business owner can find out about the financial position of his/her business and its financial performance which can be beneficial in making economic business decisions. These financial statements are also useful for other stakeholders of the company like its employees, its creditors, its suppliers, the government and even the general public. If these financial reports are to be shared outside the business then a CPA needs to issue a report on them. For this reason, it would be advisable to have a licensed CPA firm handle your bookkeeping.

The maintenance of the general ledger is also one of the bookkeeping services the bookkeeper must perform for the business owner. A general ledger is the heart of the company’s accounting records. All raw data are recorded, classified and summarized into the general ledger and used as basis in the preparation of trial balance and financial statements.

Maintenance of Accounts Receivable and Accounts Payable must also be one of the bookkeeping services. Accounts Receivable is a listing of all unpaid transactions of the company’s customers while Accounts Payable is a listing of all unpaid transactions the company owes to different suppliers. It is important that both accounts are updated because they involve cash.

Payroll processing is also one of the bookkeeping services that a bookkeeper offers to his/her client. Payroll services must also include correct tax deductions and payment to other agencies. Computations of bonuses and other deductions are also part of this service.

In contracting an outsourced bookkeeper, a small business owner can keep in mind the following tips: decide what bookkeeping services the company needs; search for a bookkeeper near the location of the business; and have a selection list of all possible bookkeepers who are near the business location. One should have a list of services they offer and the fees of each bookkeeper. A business owner should make a careful evaluation prior to choosing a bookkeeper because the future of the business is at stake.

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Justin Earl asked:




When you start out in business, you try and cut as many corners as you possibly can. You run the business out of your basement. You look for the most inexpensive ways to create your products. You hire family to help with the business. OK maybe hire isn’t completely accurate since hiring implies that they are getting paid but you get the idea. When your business starts getting some traction, your current bookkeeping system will start feel stretched. At that point you look for some help with your books.

Bookkeeping, like many areas of your business, can be handled be hiring someone in-house or by looking to an outside firm to handle the books. In fact, your outsourced person doesn’t have to be a person at all, it can simply be an online system.

What the best course of action for your business? Consider the below alternatives.

An in-house small business bookkeeper comes in many shapes and sizes. They can be family, friends, someone you hired off of a recommendation and someone who fills not only your bookkeeping gap but other gaps in your business as well. They can be friendly, moody, helpful, a pain in the **** etc. They also get sick, have feelings, have a life and other fun things. People are an essential and diverse asset to your business but that doesn’t mean that we always have to use people to drive all the functions of our business.

Bookkeeping is definitely one of those areas where automation makes sense. An outsourced/online service doesn’t get sick, it doesn’t quit, it doesn’t tell you it has a sick kid and it certainly doesn’t bring its problems to you to hear about. What outsourced, online bookkeeping can do includes; keeping your books up-to-date and tax ready, keeping a consistent system for how financial reporting is done, costs less than an in house bookkeeper and keeps your business knowing the score at all times.

Technology has given small business owners the ability to simplify their business and keep better informed than ever before. If your business is growing and you need to hire help, congrats. While you are looking for key people to fit your team don’t forget that there may be key systems and other online tools available to fill your needs at a fraction of the price. When it comes to the money in your small business, that is definitely something that you want to keep in house as much as possible.

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Ken Marlborough asked:




Understanding basic Bookkeeping procedures is vital to developing and controlling activities in business. Every company seeks talented Bookkeepers. It is necessary that students of Bookkeeping must be interested in gaining knowledge of basic Bookkeeping practices to plan a profitable future or seek a new career.

For such students there are many Bookkeeping courses available. In this era of information technology, off-site learning is made easier. There are online courses available. Equivalent to regular classes, these online classes deal with accounting terminology, keeping books, accounting equations, debits, credits, and balancing the accounts. It also teaches students how to read and understand the financial statements properly.

These online courses can be taken on either a PC or a Mac, using Internet facilities. Students need to have access to Microsoft Word and Excel to complete the assignments. Sometimes, specialized software is provided. The interactive tutorials are made for the students so they can learn to use the program from any Internet-capable computer. With the help of Webcams and innovative technology, two-way communication between student and the lecturer is also possible in some of the courses.

These programs are designed to prepare the students for an entry-level position as a full-time Bookkeeper. Bookkeeping experience is not a prerequisite for the course. The common objectives for these courses are to make students acquainted with the basic Bookkeeping fundamentals for managing a business, introduce students to popular Bookkeeping software, introduce students to double-entry Bookkeeping and reinforce students’ learning through tests.

After completing these courses, students will have a solid understanding of accounting in today’s world.

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Amitaabh Saboo asked:




Are you looking for an online bookkeeper? The process may not be as easy as you think. This is because there are several factors that you need to consider. Nevertheless, once you can spot, you are assured that you’ve found your own gold.

For those who are struggling as to where and how to identify the most ideal online bookkeeper for them, here are a number of tips for you:

1. Ask for recommendations. If you have some friends and even family members who already hired an online bookkeeper, you can ask for their help and their suggestions. The recommendations can be more tips on where to look for them or, better yet, full names of your prospective freelance staff. The good thing about going for referrals is that you have greater success of obtaining the one that you’re looking for. After all, your friends and family will never give you someone who they think isn’t competent enough for you.

2. Search the World Wide Web. Use Google. There are several websites where you can search for an online bookkeeper. Usually, too, these websites are also looking for clients. Advertising will open for more applications, which, in turn, can provide you with more options. All you need to do is to run through their profile and determine who among them fits the bill. In other words, you will still be the best judge.

3. Request for credentials. There are three things that you may want to take note of when you’re looking for your online bookkeeper. First of all, he should have the knowledge. He doesn’t have to be an accounting graduate. The most important thing is he is aware of his bookkeeping responsibilities. Second is training. He should also possess information about how to go about the tasks more effectively and always updated to the trends in bookkeeping. This will only be possible if he has trainings. Lastly, you can bank on experience. Though not all veterans are good, experience will tell you just how exposed the person is to the job. All these can be reflected into the resume of an online bookkeeper. So don’t forget to ask for their credentials.

4. Settle for an online bookkeeper with an average rate and excellent experience. A lot of times you are tempted to look for someone who can perform the job at a much lower rate. After all, you think that you can save more when you do this. But what you may not know is that you’re just basing everything in luck, which means there’s more chance in finding an inappropriate one than spotting the best online bookkeeper there is. Always remember that a lower rate doesn’t really mean good service. He may have decreased payment for his services, simply because he cannot compete with other bookkeepers, especially in terms of quality. What you can do to avoid this situation is to identify the present ongoing rate for a virtual bookkeeper and search for somebody who is willing to be paid with such price.

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Chris C. Sturat asked:




If you are interested in becoming a bookkeeper, it takes more than just the love of numbers to become one.

If you want to become a bookkeeper, you will need the right education for it and some basic experience in accounting. What bookkeeper services provide is the maintenance of the accounting records for small to medium sized companies. If the bookkeeper worked in a medium sized company, they will usually need to report to a certified public accountant; while in smaller companies, they may be the only person whose duty is to do accounting for the company. Nevertheless, they are responsible for the daily business activities of a company, ranging from banking, reconciliation, accounts payable and receivable, and payroll. However, when it comes to creating annual financial statements, it is the duty of an accountant to do it as bookkeepers are not certified to create them, only to process the transactions.

To become a bookkeeper, a person will need to attain a certificate in bookkeeping from a local college or university. Some of the courses that they will need to complete are such as payroll processing and reporting, journal entries, accounts payable and receivable, and courses on a form of accounting software. Apart from that, bookkeepers need to have the ability to process accounting transactions, so they should have certificates as evidence they can do the task at hand. They should attain certificates with work experience component so their clients will know that they are not just all talk. This allows them to have education and experience together. You can start off with becoming a bookkeeper for a small firm so you can practice your skills and improve your resume before any plans of providing any bookkeeper services on your own.

After having worked as a bookkeeper for at least two years, you are eligible to become a certified bookkeeper. With a minimum of two years working experience and successfully completing a national exam that has four parts, they can receive their certification. They will also be required to sign a code of ethics and are encouraged to continue with education credits. Getting your certification opens many doors of opportunities.

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John F Smith asked:




Times are hard and jobs are hard to find. One way to snatch that vested position is to come up with an impressive resume. If you want to get a job as a bookkeeper you must be qualified for the position. A concise resume of your qualifications will easily get you the job!

To start off, write the basic information about yourself in your resume. On a clean sheet of formal paper write your complete name, home address, contact numbers and email address. Include your most recent 1 x 1 colored photo on the upper right corner of the sheet. You should be in corporate attire when you have your picture taken. You should look as professional as possible.

The following sections of your resume should show your educational attainment and work experiences. To qualify for a bookkeeper position you should have at least taken a four year collegiate course in Accounting or any Business course. If you have taken the Certified Public Accountant’s board exam (CPA exam) do not hesitate to write that down. That could get you into a higher position latter on when you get hired.

If you have any work experience list them all down. Write the names of all the companies that you have worked for and include a short description of your job details. Write the names and contact numbers of your former employers, manager or supervisors as reference. Future employers do a background check by calling your former employers. This is essential in the hiring process. If you are a fresh graduate it would help to write down if you had any on-the-job training experience while you were studying. Again, write down the companies that took you in as an apprentice while you were on training.

Bookkeeping as a job doesn’t only deal with numbers but with transparency and accuracy in record keeping. You can get the job by reflecting in your resume how honest you are with your qualifications.

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Chris C. Sturat asked:




For any business, bookkeeping is necessary, whether to keep their financial records in a ledger, or software. Nowadays, businesses prefer using software because they are easy to carry around, make changes to, and to look for data. However, the usefulness of the software would be determined on a various number of factors.

If you are looking for suitable software, you will first need to consider how you usually prepare your taxes. If you prepare the taxes on your own, look for one that has bookkeeping software that would make your task easier to complete. On the other hand, if the taxes are prepared by an accountant, you should ask them what type of software they would recommend, because they would know which software is reliable.

Next, think about how big your business is. Smaller businesses can do with bookkeeping software that is simpler such as QuickBooks, that comes in different versions, depending on your need for the business. Larger businesses will need software that has much more functions like Peachtree because logically, the larger a business is, the more complicated the records can become.

Another important thing to consider is the skills and background of the person who will be doing the bookkeeping and using the software. QuickBooks are much more user-friendly, so if the person doing the bookkeeping does not have the background in bookkeeping, they will be able to use and navigate around the software easily. In contrast, if the person doing the bookkeeping has a strong accounting background, they may be comfortable using programs like Peachtree.

Consider what other things you will need to do as well, such as payroll. It is best to get software that incorporates all the things you will need or may need to do in the future, instead of needing to buy separate software for it. Read reviews on what each software offers, and how users have found them. If there are trial versions, test them out so you can decide on its ease of use. Once you have found one you think you will be comfortable with, you can then make the purchase.

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