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Taxation

Everything you Need to Know about Tax liability for Small Businesses

Nearly every person wants to start a Small Business Enterprise to earn more than they make while working. However, no matter how attractive and inspiring a small business startup can look, it is a very hectic job, and one should be responsible for each and everything. One of the main responsibilities you need to handle is the tax obligations for small businesses, and for that, you need to understand each and everything under the topic clearly. Here we will discuss everything you need to know about the tax liability for small businesses.

What Do You Mean By Tax Liability?

Let us start from the beginning, i.e., what is Tax Liability for Small Businesses as it is an important thing mandatory to understand without which you cannot handle business on your own. In general, a Liability is something/money which, as a business, you owe to the government. In order to pay your Tax Liabilities, you need to maintain a record and pay annually.

Tax obligations for small businesses are never the same for each and every small enterprise, as they vary according to the business’s legal structure. Thus depending on your business structure, you need to look out for various tax Liabilities which you need to pay during your small business. Read further for more information about tax Liability.

Employer Identification Number

Before we start to discuss more tax responsibilities for small businesses, we need to first understand the Employer Identification Number (EIN), also known as Federal Tax Identification Number, which is a unique 9-digit number assigned to each and every business entity in the United States by the Internal Revenue Services(IRS). This number is used by the IRS to identify your business entity and is offered free and assigned immediately.
It is mandatory for small businesses to get an EIN number after they register themselves.

Various Types of Tax Liabilities on Small Business:

As a small business owner, you need to pay the following taxes:

  • Income Tax: Every business owner needs to file an annual income tax return based on the income or profits you have earned or the money you have received every year. The calculation of income tax varies as per the business structure of the entity. You need to pay these taxes on time; otherwise, you might need to pay the estimated taxes.
  • Estimated Tax: In case your federal income tax, which has been withheld, is not enough to cover the tax you need to pay, then you have to pay estimated taxes.
  • Self-Employment Taxes: Business owners need to pay their own social security and Medicare taxes. After paying these taxes,you will get various benefits like social-security , health and medical benefits.
  • Employment Tax: As an employer, you need to pay taxes that will cover your employee’s social security benefits and medicare. Three types of taxes come under employment taxes:
  1. Social Security and Medicare taxes
  2. Federal Income tax withholding
  3. Federal Unemployment Tax (FUTA)
  • Excise Tax: Excise means any tax imposed on goods and products at the moment they are manufactured. Goods under excise taxes are sold within the country under the license granted for certain activities.
  • Property Taxes: Every business person has to pay taxes for the property at which they operate their business. Property tax changes in different states.
  • State and Use Taxes: Sometimes, the states can impose a tax on the goods and products you are selling or services you are providing. This tax is not imposed on every good or product. .

How to Calculate Tax Liabilities for Small Businesses?

One very common question which comes to mind of every small business owner is, “how much tax do I need to pay.” The Answer to this question is not the same for each business entity and does not only depend on the total revenue generated by the company. Tax Liabilities for small business are calculated on the basis of following factors

1. Your Business Structure: Not every business entity is charged the same calculated tax based on their incomes. Tax responsibilities on small businesses also depend on organization structures discussed below:

  • Sole Proprietorship: A single person who owns a whole business is called a proprietor and the business is called Sole Proprietorship.
  • Partnerships: Business owners jointly by more than one person. Individuals need to pay taxes depending on their share of the total business income.
  • Corporation: Two or three people together as a single entity forms a corporation. Under this corporation, people exchange money, goods, and property to form capital. Net profit which the corporation has made gets distributed among shareholders. Taxation is quite different in the case of a corporation. First, the tax is calculated from the total profit made by the corporation, and afterward, the individual shareholders have to pay taxes. Thus, we can say double taxes.
  • Partners in LLCs are liable to taxes based on their share in the company’s net income.

2. Taxes Differ as per the state laws and regulations in which they are operating.
3. Small Businesses have to pay various taxes apart from income tax, like capital tax, dividend tax, payroll tax, and various types of taxes mentioned above depending on their location, organization structure, and other factors.

How Can I Reduce Tax Liabilities on Small Scale Businesses?

You can reduce your Tax liabilities for small business through following ways:

  • Health Insurance: IRS provides special advantages to people who pay for their own health insurance.
  • Under Section 199A, if you report business income on your personal ITR, then you can claim for qualified business income deduction.
  • You can also claim for deduction in tax liabilities on the bases of depreciation expenses.
  • You can also use your home as the main center for your business activities. In that case, you might reduce your tax bill.
  • You can also apply for Tax Exempt status in order to make a compulsory payment. You can claim Tax Exempt status on various taxes like income tax, property tax, charitable tax, and others. For that, you need to check the official website of the IRS.

Conclusion

From the above information provided above, we hope it might have provided you an insight into tax liabilities for small businesses. However, in case you still have any doubts regarding taxes, you can contact us directly through live chat or drop us a mail. We will be present there to assist in responding to your query asap.

Business

How Outsourced Bookkeeping Can Save Your Small Business Money?

Managing the finances and the accounting task is the most daunting task. Whether you have started your new business or are a growing entrepreneur, it always gives you stress and headaches. That’s why most entrepreneurs or business owners outsource bookkeeping for small businesses. The idea of outsourcing small business bookkeeping seems to be intimidating at first sight; however, in the long run, it proves to be beneficial. However, the problem arises in picking the best-outsourced bookkeeping services, as you can not trust everyone, especially in terms of your business finances. So, if you too are eager to know more about outsourcing services, then read this blog till the end.

What Does Outsource Bookkeeping for Small Business Mean?

Let us start by understanding the concept of outsourcing bookkeeping. The term outsource bookkeeping for small business for accountants simply means assigning your daily financial recording task to a third person or a business processing organization. In simple terms, you pay a third person to take care of all your business financial tasks. As we already know, bookkeeping is the first stage of accounting and, thus, must be performed with accuracy. When you outsource your bookkeeping, it gives you much free time that you can utilize in the growth of your business. Outsourcing bookkeeping for small businesses makes your life much easier and more efficient.

The external bookkeeper will help your business in plenty of ways, including managing your receivables accounts, payable accounts, payroll, bank reconciliation, sales tax, and more. An outsourced bookkeeper will help you with the below-mentioned things:

  • Record your daily financial data
  • Monitor your business financial performance
  • Keep a record of your payments, purchases, and receipts
  • Calculating the accurate tax for your business
  • Organise and store data

Top Reasons for Outsourcing Accounting Services for Small Business

Outsourcing accounting services for small businesses is not only cost-effective, but it also reduces the chances of internal fraud and assures you high-quality work with higher accuracy. If you are not sure whether to outsource your financial work or not, then look at the below-mentioned reasons.

The top Reasons for outsourcing accounting services for small businesses are:

Free Your precious Time:

Managing your delegated financial work is a hectic task. It consumes a lot of your valuable time. By outsourcing your bookkeeping task, you can easily save your valuable time. You can reclaim this precious time for the growth of your business.

Get Managed By Professionals:

Accomplish your work with a team of highly professional experts from outside your work. They will handle your accounting work more accurately, so there is less chance of having errors. Moreover, they can complete your financial work in a shorter period of time.

Cost Saving:

Outsourcing the bookkeeping task is less expensive than having an internal accountant. When you outsource your financial work, you save the money that you spend on the training, salary, benefits, and equipment of an internal accountant. You only need to pay for the services you avail when you outsource your work.

Access to Top Resources:

For a small business company, budgeting plays an important role. Buying top-notch accounting software can be proven a costly affair for them, as they are extremely costly. So, you can outsource your work, as the external company has already purchased them. So, by paying a small fee to the external company, you can access the top resources easily.

Simplifies internal Procedure:

As you outsource your financial work, you simplify your internal financial procedure. The outsourcing process saves a lot of time and money. The outsourced company will take care of all your financial work from start to end and will inform the management as needed.

Data Security:

Keeping the financial data with security is a hectic task. You need the proper data security measures. However, when you outsource your financial data task, third-party business firms will take care of your precious data. They follow all the data security protocols and measures to safeguard your financial data.

Why I Need to Outsource Bookkeeping for Small Business Services for Accounting

There are certain instances when you should leave your DIY and hire a professional expert to manage your daily accounting tasks. Let us have a quick look at the different signs of outsourcing bookkeeping for small businesses.

  • Missing Tax Deductions
  • Lack of Time
  • Outdated Records
  • Less Knowledge of Bookkeeping
  • Unpredictable Cash Flow
  • High in-house accountant cost
  • Want to concentrate more on expanding your company
  • Doubt of having fraud

What are the Benefits of Outsourcing Small Business Bookkeeping?

Bookkeeping basics is a vital part of your business; however, employing them can be a difficult task. The bookkeepers help in accomplishing various tasks. Normally, it is believed that you must accomplish your financial tasks internally; however, finding a highly knowledgeable bookkeeper is highly costly and difficult. Outsourcing small business bookkeeping services increases the profitability of your business.

Let us have a look at the various benefits of outsourcing accounting services for small business.

Reduces Cost:

When you outsource small business accounting tasks, you save a lot of money. Hiring an internal accountant is a costly affair as it includes their salaries and other perks such as sick days leave, vacation, workstation, pension programs, and others. However, you can save all these costs by outsourcing the financial work. You will only be charged for the services you actually use.

Saves Time:

In business, time is money. However, for newbies, managing the business’s financial tasks can be a daunting task. It takes a lot of time and money. However, you can simply save your precious time by assigning your work to an external person who is an expert in their work. You can utilize this time in the growth of your business.

High Improved Accuracy:

For the small business owners, managing the financial work is a difficult task. Also, there is a high chance of errors occurring. However, you can reduce the chances of errors by improving the accuracy. Though it can be a difficult task for the newbies, for the professional experts, it is an easy task. They are experts in handling financial data with much better accuracy.

Better Scalability:

With the growth of your business, the accounting software needs to be scaled. In the starting phase, handling business finances can be an easy task; however, with the growth of your business, the complexities grow. And, to handle these complexities, you need an expert. As finance firms already have experts in different niches, it becomes easy for them to handle your growing business complexities.

Professional Experts:

When you outsource your financial tasks to a reputed business service provider company, they will assign a highly professional expert to handle all your financial tasks. These experts have years of experience in handling financial activities. They respond in a much quicker time and maintain a high quality of work.

Proper Business Insights:

The professional person will give you the proper financial data about your company. They will provide you with a general picture of your business financial data, such as income statements, balance sheets, bank statements, and more. It helps the business owners to flourish their business.

Ease in Making Decision:

Better business insights help you in making better decisions. Outsourced bookkeeping gives you the proper business information with the proper facts and figures, which helps you make a wise decision. This ultimately helps in expanding your business.

Top Outsourced Accounting Service Features You Should Know.

Once you have decided to outsource your financial data, you need to look for a reliable and trustworthy outsource bookkeeping for small business. However, at present, bookkeeping outsourcing companies are growing like a mushroom in the jungle, and it becomes very much difficult to pick the right service for you. There are certain top outsourced accounting service features that a good company must possess.

Years of Experience:

Managing the funds is a difficult task. Though bookkeeping services do not need highly experienced professionals, handling other tasks, such as cash flow, needs a properly experienced person. Thus, before picking an outsource bookkeeping services company, always look for the number of years they are having in handling the finances.

Professional Staff:

Before finalizing the finance outsourcing company, have a quick look at their professional staff. No doubt, outsourcing financial services globally can prove beneficial to business owners. However, you must also consider the language barrier. Moreover, do not forget to look at the certificates of experts.

Smart Technology:

Whenever you are choosing a financial firm, do not forget to look at the progressive technology they are having. For a better experience and efficiency, the financial firm must use the latest smart technology.

Spectrum of Services:

Do not forget to look at the wide spectrum of services that the financial firm offers. Keep your requirements in mind and select the best Virtual & Outsourced Accounting Services company. If you are fascinated with the bookkeeping service provider only, then think about the scenario when your business expands and you need more services. Hence, it is advisable to choose a firm that offers a wide range of services.

Business Support:

Support plays an important role when selecting the service provider company. Hence, check out the support medium that the financial firms provide. A broader support spectrum will be better.

Specialized Focus:

The proverb jack of all traits, but master of none fits here. The business owners must think and look for the specialized services that the company offers. It is best to pick the service provider who is the master of their field.

Competitive Pricing:

Last but not least, do look for the pricing. Every company has their own budgeting. It is good to spend a little more time researching and picking the best services that fit into your range.

Why Choose Us for Outsource Bookkeeping Services

As stated earlier, there is a plethora of bookkeeping services in the market. Picking up the right service partner is a difficult task. If you are having a dilemma, then look at the below-mentioned points. These points set us apart from the rest of outsource bookkeeping for small business.

  • Professional Experts

We have a dedicated team of highly professional experts who are masters of their field. No matter how simple or complex your business needs are, our experts are well-trained in handling all.

  • 24/7 Accessibility

We understand how important bookkeeping and accounting are for your businesses. We are available for you 24/7 so that you can have complete control of your finances.

  • Tailored Design Services

Our highly skilled experts offer customized, tailored services for your business needs. From online services to taxation and from accounting to financial reporting, we offer tailor-made services for you.

End Notes

There are a lot of things that small businesses or entrepreneurs handle to keep going and profitable. However, handling so many things at a time creates chaos. On top of that, managing the finances on their own adds icing on the cake. The best is to outsource bookkeeping and accounting tasks to the best virtual & outsource bookkeeping for small business. The highly experienced experts help you in increasing your business productivity and profitability. In a nutshell, it is worth outsourcing bookkeeping for small businesses. If you have any queries, do not hesitate to call our experts anytime or email your problem at info@bizbooksadvice.com.

Frequently Asked Questions
Q. 1 – Is it cheaper to outsource bookkeeping for small businesses?

A – Yes, outsource bookkeeping for small business is much cheaper in comparison to hiring a full-time expert. Suppose you accomplish your financial task by yourself; even then, it is worth it to outsource your financial work. You pay a third person to accomplish your task to free your valuable time.

Q. 2 – How do I outsource my bookkeeping?

A – To outsource your bookkeeping, all you need is to find a reliable and trustworthy bookkeeping firm. Avail their services as per your requirements. The best part of outsourcing bookkeeping tasks is you only pay for the services that you avail. Or, you can dial the above-mentioned phone number to reach the trustworthy bookkeeping service.

Q. 3 – What are the tasks of the bookkeepers?

A – Usually, the bookkeeper helps you accomplish the below-mentioned tasks.

  1. Online Data entry
  2. Managing accounts payable and accounts receivable
  3. Bank Accounts Reconciliation Software
  4. Create monthly finance reports and statements
Q. 4 – Does outsourcing bookkeeping comprise any risk?

A – Yes, there are certain risks when you pick the wrong bookkeeping outsourcing company. While picking the outsource company, keep in mind the data security proper communication. Also, do check whether the company follows the proper laws and regulations.

Q. 5 – Why do most of the companies outsource their financial work?

A – There are multiple reasons to outsource their financial work. Mostly, it is related to the overall growth and increase in the revenue of the company. The main idea to outsource the financial work is:

• Save time and money
• Access global talent

Business

Tips for Creating a Cash Flow Projection for Your Business

The cash flow statement is a financial statement that reflects how much cash is entered and withdrawn from a company during the accounting period. But, if you want to get the closest insight regarding the future of your business, you need to create a cash flow projection. The main purpose of the cash flow projection is to get a clear picture of how much money the business will gain or spend in the near future.

This useful guide will teach you everything about cash flow projection and its benefits. Along with this, we have also explained the proper steps to create the cash flow projection statement. Thus, it would help your business to give a clear vision to utilize its cash efficiently.

Facing difficulty while trying to create a cash flow projection and need help? Contact us anytime anywhere and let our experts help you in the best possible way. 

An In-Depth Insight Into the Cash Flow Projection

Cash Flow Projection is one of the efficient tools that help business owners estimate the flow of cash coming in and out of the business. Moreover, the cash flow projection, also known as cash flow forecast, allows companies to predict their future cash positions. Apart from this, it also prevents cash shortages in the future and can get a return on cash surpluses.

Is Cash Flow Projection Beneficial for Your Business?

The Cash Flow projection helps the business owners make better decisions for the future, considering the cash inflow and outflow in the company throughout the year. Apart from this, there are numerous reasons why cash flow projection benefits your business. We have explained a few of them below; check them out.

1. Makes the Process of Decision-Making Easy:-

The best thing about creating a cash flow projection is that it helps businesses make better organizational decisions. Moreover, the cash flow projection enables the business owners to take the appropriate decision to reduce expenses when there is a shortage of funds.

2. Helps in Estimating the Shortage of Cash:-

There might be certain instances when you know it very well in the upcoming month, the sales will go down. But, it is more effective when you look at the exact number on the spreadsheet.

However, at times, small businesses have caught themselves in a shortage of funds. In that scenario, you can stop the shortage, but knowing about it will help you make the decisions accordingly.

3. Highlight the Potential Affected Areas:-

The cash flow projection will give you a clear insight into when your expenses exceed the income earned. In that circumstance, knowing about the exact affected areas will help you to resolve it asap. Moreover, it is also known to be one of the best things for computing the cash coverage ratio and cash-free totals for business.

4. Prevents You From Spending Money:-

Spending business money is one of the most crucial things you must do, considering many things in mind. However, it is an optimal time when you can easily spend the money and when you can reduce your expenses to a minimum. With the help of the cash flow projection, you will get to know the right time for spending money, which would be beneficial for the business.

Key Points You Must Know While Preparing a Cash Flow Forecast

Here, we have described some essential points to consider while preparing a cash flow forecast. So, have a look at the pointers listed below.

1. Update the Details Daily:-

For instance, if you want to do the cash forecasting for the next method, in that case, updating is not required. But, if you decide to make the cash flow forecasting monthly or annually, things might change rapidly. In that scenario, including customers and mentioning more monthly expenses is essential. Updating the details timely will help businesses get a clear picture of the business earnings.

2. List the Seasonal or Variable Expenses:-

Seasonal changes are a major reason that might hamper the cash flow. Considering this, it is essential for the businesses that those fluctuations must be included within your projections.

3. Be Ready For the Unexpected Changes:-

While preparing the cash flow projection, we estimate that all the outstanding invoices will be paid, but the reality is something else. So, it is a must to be conservative while estimating the cash flow projection that it isn’t important that all your dues will be clear.

In short, the company must prepare itself to handle every unexpected change that occurs in the business.

4. Generate the Monthly, Quarterly, and Annual Forecasts:-

Another important thing you must consider is always staying ahead and preparing the monthly, quarterly, and yearly cash flow forecasts. There are certain times when the monthly and quarterly forecasts help construct a well-settled business.

However, the weekly projections are mandatory for the companies to cope with the necessary changes like mergers or acquisitions.

Know How to Create a Cash Flow Projection Using These Simple Steps

The users might find creating the cash flow projection statement a bit complicated, but it becomes easy when you know the correct process. Let’s quickly glimpse the steps below to accurately generate the cash flow projection.

First Stage:- Computing the Current Cash Amount of Your Business

In the initial stage, you are required to compute the total cash that the company has. For instance, if a cash flow statement is prepared at the end of the month, evaluate how much money your company has earned and subtract it from the total amount spent by your company.

(Cash at the Beginning of the Period = Previous Accounting Year Income – Previous Account Period Expenses). 

Second Stage:- Make the Estimation of the Projected Cash

The next stage of preparing the cash flow projection statement is to figure out how much cash the company expects to earn during the upcoming Period. There are different sections from where you can earn the cash, which are as follows.

Cash That is Earned Via Operating Activities 

There are two different methods to compute the cash flow from operation, i.e., direct or indirect. The direct method considers all the company’s cash obtained from the operations and subtracts it from all the cash disbursements.

Conversely, in the indirect method, you must begin with the net income of the company’s income statement. Later, make the necessary changes to the accruals made throughout the reporting period. 

Cash Received Through the Investing Activities:- 

This segment records the cash collected while buying long-term assets for the company. It may comprise equipment, facilities, and properties. Apart from this, you must remember that this section only consists of the investing activities apart from debt.

Cash Flow Via Financing Activities:- 

Within this section, it includes the cash outflows and inflows that are linked with the financing activities. Moreover, it includes the cash flow from equity and debt financing. However, if you are accessing the generally accepted accounting principles (GAAP), cash flow also comprises cash received via dividends paid. 

Related Page: Setup Track Inventory in QuickBooks Online

Third Stage:- Evaluation of the Potential Expenses:-

Knowing the company’s expenses is important to determine whether you spend more than you earn. You can include regular expenses, rent, and utilities or pay the annual charges to compute the expenses.

Fourth Stage:- Calculation of the Estimated Income Minus Estimated Expenses

After computing the projected cash and expenses, it is essential to calculate the projected cash flow. For that, you must apply the formulae explained below:

“Projected Cash Flow = Total Projected Cash – Total Projected Expenses.” 

Herein, the total projected cash will represent the cash you earned, and the Projected expenses state the expenses incurred. On the other hand, the projected cash flow figure could be either negative or positive, depending upon the outcome of the results. However, you may also use this amount to generate the next accounting period opening balance.

Fifth Stage:- Including the Projected Cash Flow Amount to the Current Cash Amount

After making all the calculations, if you spot that the company’s cash flow figure is positive, include this number with your opening balance. On the other side, subtract the cash flow amount if it represents a negative figure. However, with the help of this amount, you can figure out whether the company earns enough money during future pay periods to compensate for the expenses and make a profit.

Drawing to a Conclusion!!

The cash flow projection plays a crucial role in making the right decisions for the growth and stability of the company. However, we assure you that this post will help you understand what exactly Cash flow projection is, its benefits, and how to create it. If you still have issues preparing cash flow projections, contact our experts immediately via live chat or email support facility. Our professionals will guide you in the best possible manner within the shortest time possible.

Bookkeeping

How To Start a Bookkeeping Business in 2023

The digital era has brought endless opportunities to earn money online. If you are good at playing with numbers and keeping things well organized, then surely starting a bookkeeping business is a perfect choice for you. The ever-demanding business area needs a little cash to start it from scratch.  However, how To start a bookkeeping business in 2023 is not an easy task. It requires a lot of planning. Let us figure out the entire process of starting a bookkeeping business from scratch with no experience.

What Does a Bookkeeper Do?

A bookkeeper is an inherent part of any business operation. It is the most thriving job that assures that all the financial transactions are kept correctly as per the law. Most companies hire bookkeepers to manage and organize their financial transactions. The bookkeepers help businesses produce the most critical financial statements, such as balance sheets, profit and loss statements, and more.

However, keep in mind that bookkeepers are different from the accountants. You do not require any professional degree to become a bookkeeper. The bookkeepers can not perform the audits just like the certified public accountants. Also, they can not handle the taxes, just like the accountants.

The Services of Bookkeeping Include the Following:

  • Manages the accounts receivables and payable.
  • Manage the business finances
  • Generate the financial statements
  • Help businesses understand their financial statements

Can I Start a Bookkeeping Business with No Experience?

Most of the individuals got stuck with this question. The answer to your question is Yes. Of course, you can start a bookkeeping business with no experience. However, to perform well and stay ahead in the market, you need various certifications. These certificates will help you in providing reliable and quality services to your clients. The errors in bookkeeping can be stressful and can be financially disastrous.

How Much does it Cost to Start a Bookkeeping Business?

Wondering how much a bookkeeping business will cost? Well, if you are the only one and possess a laptop and Wi-Fi internet, then it will not cost you much. You only need to spend the amount on the certifications or on the growth of your business.

However, below, we have mentioned the cost of setting up a bookkeeping business, as per the survey.

  • The minimum start-up cost for a bookkeeping business is $62
  • The average start-up cost for a bookkeeping business is $12,272
  • The maximum start-up cost for a bookkeeping business is $23,259

Check List to Start a Bookkeeping Business in 2023

Running a bookkeeping business is not about having the technical skills of finance balance sheet. It is far more than that. Usually, it involves understanding the ongoing trends of the market, having the proper knowledge of your client’s competitors, and understanding the potential needs and requirements of your clients.

Below, we have provided the necessary traits to start the bookkeeping business.

Step 1: Create a Business Plan

Just like any other business, running a bookkeeping business needs a proper business plan. The right business plan will help you get on the right foot. A good business plan not only clarifies your business goals and objectives but also helps you in getting the right funding. Normally, a strategic business structure includes the following:

  • Business strategies and description
  • Competitive analysis
  • Organization and structure
  • Operating plan
  • Sales and marketing strategies
  • Financial plan
  • Technology stack

Step 2: Pick a Business Name and Register your Business

Once the business plan is ready, you need to provide a unique name to your business. Naming the business is essential as it appears on all your documents, paperwork, and contracts. It also helps your clients in connecting with your brand. While naming the business, make sure the name is unique, and no other business is using the same name. Otherwise, you might face legal charges.

The next step is to register your business. It is important to register the business in order to offer the legal services in your state. Generally, you can register your business as:

  • sole proprietorship
  • partnership,
  • corporation
  • LLC

Step 3: Identify the Target Market

In order to start your business, it is important to identify your target market. The proper research will help you in identifying your potential customers. Also, proper market research will help you in uncovering a particular niche or the service you are offering. Whether it is the medical industry, tech start-ups, or restaurants, each niche has its own unique characteristics. Henceforth, the proper assessment of the market will provide a strong foundation for your business.

Step 4: Pin Point the Services You Will Offer

Once you have obtained all necessary certifications, it is important to categorize what services you will offer to your client. After categorizing the offered services, the most important process is to decide the service charges. Deciding what to charge from your clients often requires a lot of research. Talk to people and business persons, or check the business websites such as work to set the price of your services.

Step 5: Get Proper Funding and Right Insurance

Getting the proper funding for your business helps in the survival of the business. Seeking funding from the bank or the investor will help the potential lenders understand your business in a much better way.

Getting your business insured is the next step. Good insurance protects your business from various issues. Usually, the insurance policies are categorized as Business Owner’s Policy, Business Property Insurance, Workers’ Compensation Insurance, Professional Liability Insurance, and General Liability Insurance.

Step 6: Invest in a Good Bookkeeping Software

Getting proper bookkeeping software is the most crucial part of your business. There are various bookkeeping software available in the market, such as QuickBooks, Sage, and Xero. Deciding the right software can be an overwhelming task. The below-mentioned points will surely help you in deciding which software tool to use.

  1. Payroll software or provider
  2. Client software
  3. Bookkeeping/accounting software
  4. Practice Management Software
  5. Electronic File Sharing

Step 7: Develop a Marketing Plan

You are about to reach the finish line of how to start a bookkeeping business with no experience. Develop a proper marketing plan to market your business. A proper market and research plan will help you in achieving your business goals.

Step 8: Deliver Your Work

Voila! You have reached the last stage of running a bookkeeping business. After your hard work, you have got your first client. Deliver high-quality work without any delay. The high-quality work delivery will assure that your client will not leave you.

Related Page: Difference Between a Bookkeeping And Accounting

Is Starting the Bookkeeping Business Right for You? The Bottom Line

Starting a Bookkeeping business might attract you. It requires no prior experience or certifications to start the business. However, it comes with its own unique challenges or barriers. We have explained all the traits of starting a bookkeeping business in 2023. You can always get in touch with our professionals if you have any doubts.

Accounting

Advantages and Disadvantages of Outsourcing Accounting Services

Regardless of the industry you run your business into, maintaining your books and handling your accounting is an inevitable part of your business. Efficient management of accounting and bookkeeping plays a crucial role in the success of a business, be it a small business, MNC, or NGO. You need to hire a team of professionals to keep an eye on your cash flow, maintain books, and create financial reports.

However, outsourcing an accounting service will shift all these tasks to a virtual mode, and you can save time, effort, and money in handling these tasks. But, is outsourced accounting service all good with no flows? Well! We will discuss this in our post, which elaborates on the advantages and disadvantages of outsourcing accounting services. Let’s find out!

What Is An Outsourced Accounting Service?

Before proceeding any further, let’s understand what an outsourced accounting service is. Outsourcing an accountant means hiring an accounting company or an individual outside of your firm to manage various accounting and bookkeeping tasks. It does not require an in-house team or an individual from within the firm.

It can offer you a full accounting department experience without needing you to hire a team of bookkeepers to set up a physical infrastructure to get get your accounting managed. The list may include the management of your cash flow, payroll, taxation, bookkeeping, and several others. Outsourcing an accounting service can have its own benefits and limitations.

Pros of An Outsourced Accounting Service

Some of the main advantages of outsourced accounting services are explained in the below-given list:

1: Reduce Operational Cost

Maintaining an in-house accounting team can cost you more money as compared to an outsourced service. Besides, you will have to set up workstations and IT infrastructure and hire full-time employees. On the other hand, an outsourced service can save a bundle for you when getting these important tasks accomplished. Furthermore, you can avail of the services during the tax season and pay for the acquired service only.

2: Expert Accountants & Bookkeepers

Outsourced bookkeeping services enable you to get access to more experienced accountants and bookkeepers at comparatively lower rates. Their expertise can streamline the major competencies of your business accounting so that you can focus on the shortcomings of your business. Furthermore, they ensure the timely payments of bills and taxes and keep compliance issues at bay.

3: Easy Onboarding & Enhanced Quality

Building an in-house accounting team takes a lot of time. Additionally, it takes more time to train and improve the cohesiveness between the team and departments. On the other hand, hiring expert professionals not only save your time but also improves the quality of the operations. You can save yourself from the hassles of the hiring process and add expertise to your firm with the utmost ease.

4: Protection Against Frauds & Flaws

When there is only one person in charge of your business accounting, it makes the process vulnerable to fraud and errors, especially in the case of small businesses. It becomes easy to deliberately ignore the calculation errors or tempering with the books. Furthermore, made-up expenses can also go unnoticed.

On the other hand, outsourced accounting services offer various stages of transaction processing, and reports, thereby enhancing internal controls. A committed team of qualified professionals keeps an eye on your accounting processes and keeps them devoid of fraud and flaws.

5: Contractual Service

If it is your tax filing season, hiring professional accountants will get the task accomplished. If you don’t need to get your business accounting handled anymore, simply end up with the outsourced service as per your requirements. However, you need to give prior information about the termination of the contract based on the pre-specified terms.

Cons of An Outsourced Accounting Services

Proceeding further with the comparison between the advantages and disadvantages of outsourcing accounting services, let’s discuss the cons of outsourced accounting:

1: Hindered Communication

Despite the fact that your bookkeeper is offering you the best accounting/bookkeeping service, there is no way that they can be present physically in your office. In such a case, making the smallest changes will become a pain in the rear. Communicating the smallest changes will take additional time, especially when change needs to be implemented immediately.

2: Security Threats 

Hiring someone from outside of the firm and trusting them with your crucial financial information can be a bit of a problem. When outsourcing a service, you need to grant them access to your confidential financial information, showing full trust in them. It makes your business finances prone to multifaceted security threats.

3: Lesser Control

When everything is managed remotely to a virtual setup, you will not be able to walk to the hall and track the latest updates. You will not be able to instruct an accountant to accomplish a task on a priority basis. You can receive weekly or monthly reports as specified in the service contract. Giving up on control can sometimes feel uncomfortable. However, most things depend upon the relationship you have with your outsourced accounting firm.

Things To Keep In Mind Before Outsourcing An Accounting Service

Now that we have seen the advantages and disadvantages of outsourcing accounting services, it is clear that most things depend upon the firm and your relationship with it. If you want to make the most out of your outsourced bookkeeping service, considering the below-listed points will help:

  • Accounting is a very broad concept that involves multiple functions; therefore, you need to understand our requirements and put your priorities straight to the firm.
  • Be clear with your requirements and scope of the job, and also establish the goals you want to achieve by outsourcing an accounting service provider.
  • Be careful with your data security and when outsourcing a bookkeeping service, check the reviews and experiences of their prior or existing customers.
  • When getting your business accounting in a virtual setup, communication plays a key role. You need to make sure that the communication is intact. It depends on how you communicate and what terms you share with your outsourced accountant.

Final Words!

This post elaborates on the pros and cons of outsourcing accounting services. If you want to reap the benefits of an outsourced service, it is crucial to understand its limitations as well. Hope you find this piece of information useful. Stay tuned for more.

Business

Top 10 Useful Tax Saving Tips For Small Businesses

Managing the expenses efficiently and accurately is a hectic task for the small business owners. However, proper expense management is the key to profitability and sustainability for businesses. Inevitably, there are thousands of ways to reduce expenses. However, among all, tax saving is the most effective one that keeps businesses alive in the market. In case you are wondering how can a small business reduce taxes, then there are many tax-saving strategies for business owners. Follow our best tax saving tips for small businesses owners to save your hard-earned money.

What are the Best Business Tax Savings Ideas to Follow

Wondering how small businesses can save on taxes & tax saving tips for small businesses? Do follow our income tax saving tips for 2023 USA and learn more.

  1. Record All Your Business Expenses
  2. Take Advantage of Having a Child
  3. Avoid Penalties from Late Payments
  4. Avoid Capital gains
  5. Learn about 401 (K) and W4 Forms
  6. Contribute to Retirement Account
  7. Add money to 529 Account
  8. Contribute to Different Schemes/Charity
  9. Health Saving Account
  10. Seek professional help

To help business owners, our experienced professionals have explained these tax saving tips in 2022 in detail. Let us Have a quick look at each of them.

1. Record All Your Business Expenses

No matter how large or small your expense is? You must record each and every expense that is incurred towards running your business. At the beginning of your business, there are certain preliminary costs that you pay. All these start-up expenses come under the capital expenditure. Look out for the sections in tax law where you can get some relaxation on these expenditures.

Moreover, recording every business expense helps you in understanding the proper and wise utilization of your funds. Also, the proper records will help you understand your business expenditure in a better way in the long run, ultimately helping you in reducing your business tax liabilities.

2. Take Advantage of Having a Child

Raising a child is really expensive. You can avail the tax credits available to parents to save your hard-earned money. Below, we have explained both the tax credits.

  • Child Tax Credit 

In this, you can avail of up to $ 2000 per dependent child under the age of 17. Based on the modified adjusted gross income (MAGI), you can adjust the gross income with some adjustments for high-income taxpayers. However, if you are a single filer with more than $ 2000 MAGI or a joint filer with more than $ 4000, you can not avail this benefit.

  • Child and Dependant Care Tax Credit 

You can avail yourself of the child and dependent tax credit plan. This plan helps you take care of your spouse, who is dependent on you. Individuals whose gross income is more than $438,000 cannot avail themselves of this plan.

3. Avoid Penalties from Late Payments

Do not try to file your taxes at the last minute. Always try to file your taxes on time, as timely filing sets off present-year losses against future income. Also, the late filing of taxes will end up in filing heavy penalties. Save your hard-earned money by avoiding the tax penalties just by filing the taxes on time.

4. Avoid Capital gains

The capital gain is the one that most business owners look for. However, holding the capital gain for a long period of time will end up in paying the taxes. The tax rate on the gains depends on the time duration you hold up the profit. You can avoid or minimize capital gains by practicing some simple things.

  • Try to hold the gain for a longer period of time
  • Try to donate the appreciated stock
  • Try to reinvest the dividend

Do read the official website of the IRS to know the exact income tax rates.

5. Learn about 401 (K) and W4 Forms

The most popular way to reduce taxes is the 401 (K). Less taxable income means less tax. The paychecks from 401 (K) are exempted from the taxation. For the year 2023, you can funnel up to $ 22,500 per year into an account.

Also, you can take the help of W 4 Forms to save your hard-earned money. The W-4 form is given to your employer, clearly stating how much tax they can withhold from your paychecks. By simply raising the tax withholding, you can pay less when it comes to paying taxes. However, if your refund is big, you can reduce your withholdings.

6. Contribute to Retirement Account

Contributing to the tax-deferred retirement plan, you can simply reduce your tax bill. There are several retirement plans that maximize retirement savings, and you can also reap the benefits of tax savings. As a small business owner, you must invest in a good retirement plan as a business tax savings strategy.

7. Add money to 529 Account.

The 529 offers two potential ways to save your hard-earned money. The contributions made with after-tax dollars are tax-deferred while invested. Also, the amount used for educational purposes is exempted from taxes. Moreover, the ones who are contributing to the 529 accounts are eligible for state income taxes or credits.

8. Contribute to Different Schemes/Charity

The tax saving tips for salaried employees earning a high income are to contribute to the different schemes or donate more to charity. As per the IRS, you can make cash deductions up to 60% of your adjusted gross income. For the non-cash assets, it is 30%. To save your taxes, you can donate directly to a charity. Also, you can donate non-cash assets such as stocks to avoid capital gains.

Moreover, you can invest in companies that pay dividends. To reap the benefits of the tax saving tips for small businesses, you must invest in the companies that are qualified by the IRS and pay you the qualified dividends.

9. Health Saving Account

The employees who are on a high deductible health insurance plan by their employer can avail of health saving accounts to save on taxes. The HSA contributions are exempted from the taxes. The contributions made by the individual directly to the HSA account are 100% tax-exempt.

The maximum deductible contribution for an individual is $ 3,850, and for a family, it is $ 7750 for 2023.

10. Seek Professional Help

The tax laws are often unpredictable and bring a new wave every year. These changes significantly impact your returns and deductions. The changes can be positive or negative, depending on the business environment. As a business owner, it becomes very difficult to keep a constant eye on these changes. Often, the owners miss out on the tiny changes, which results in them paying heavy taxes. To overcome such scenarios, you can seek the help of a professional expert. The certified professional accountant (CPA) will take care of all tax changes that are relevant to your business and help you in saving your tax amount.

Related Page: Cash Flow Projection

Bottom Line

Giving your hard-earned money to the government is the most difficult task. However, with the right strategies, tax saving tips for small businesses can pay less to the IRS. However, while applying these tax-saving strategies, always keep in mind that tax codes are always subject to change. So, always keep yourself updated to avail yourself of the best possible tips and tricks. In case you still feel the need for a helping hand, do call us.

 

Bookkeeping

Why Should You Hire A Professional Bookkeeper?

Recording and handling the company’s day-to-day financial activities is major in every successful business. Isn’t it difficult to handle all the business accounting tasks alone as a business owner? This is because managing all the accounting tasks on your own requires effort and dedication. So, to reduce all such stress from your shoulders, hiring a professional bookkeeper that fits best for your business is a must.

This comprehensive guide covers everything you must know to get the best bookkeeper to help the company’s growth. Thus, it would help you get a better vision regarding improving the business.

Are you facing difficulty while choosing a professional bookkeeper for your company? Contact us anytime anywhere via call and live chat, and our experts will guide you with the proper tips to get the right one as per your requirement. 

What are the Job Responsibilities of a Professional Bookkeeper?

A bookkeeper is a person in the company responsible for handling financial tasks such as preparing accounts. Moreover, they also help businesses consolidate the accounts books, bill reminders, process payments for suppliers, and manage payroll. However, to learn more about the job responsibilities of a bookkeeper, you must go through the pointers below.

  • The bookkeeper helps in maintaining the general ledger by shifting subsidiary account summaries.
  • Moreover, it also helps generate financial reports by collecting, analyzing, and summarizing account details and trends.
  • Also, it prepares the system to account for all the accounting transactions by constructing the charts of accounts and explaining the bookkeeping policies.
  • The best thing is that the bookkeeper works according to the rules and regulations of legal, federal, state, and local laws.
  • They also help the companies handle subsidiary accounts by verifying, allocating, and posting the transactions.
  • Additionally, the bookkeepers also keep the proper track record of the historical records by filling the documents.
  • Another major role of the bookkeepers is to contribute to the team effort so that they can focus on achieving the results required.

Know About the Reasons Why You Need to Hire a Bookkeeper?

1. Help you in Saving Your Precious Time:-

Usually, business owners have to spend several hours handling bookkeeping and other accounting tasks alone. Since it occupies a lot of time and is complicated, you need to leave it at the bottom of the list. However, when the deadline for filing the tax returns, you have to spend all your valuable time to pay tax on time.

Outsourcing a highly skilled bookkeeper can make time in several other crucial business segments. Even though you are busy performing other business tasks, the bookkeeper will handle all the financial tasks and help improve the workflow.

2. You can Focus on the Growth of Your Business:-

Once you get a clear insight into the income and expenses of your company, it becomes much more convenient to handle the financial situation. Moreover, it also gets easier to determine spending patterns and sales trends.

A well-trained and dedicated bookkeeper will help you make a better decision regarding the day-to-day business activities. Moreover, they can help you predict seasonal ups and downs. Thus, they will ensure that you properly decide to spend money in case of a cash shortage or surplus.

3. Gives You a New View Point About Your Business:-

For instance, if you are running a startup and are in the development phase, the bookkeeper will help you by giving you a new viewpoint of your business. They will put all the accounts in the books of accounts and run reports on how much the company is earning monthly or yearly.

Afterwards, the bookkeeper will give you a clear picture of the numbers and help you decide accordingly. Moreover, they will give the outside point of view and tell you how to run the business efficiently so that you can earn more profits.

4. Ensure the Smooth and Error-Free Tax Filings:-

Every year, when the tax season arrives, it becomes a hustle for all the company owners to file their taxes on time to avoid late tax penalties. So, to avoid such hustle, organizations need to hire a well-trained bookkeeper. They will offer you the interim or yearly financial statement, defining the exact financial status of your company.

As a result, it would help businesses to make better decisions in advance, which would help them reduce their tax bill. Above all, having all the documents in one place will make generating accurate and complete tax returns more convenient.

5. Helps you in Saving Money:-

Sometimes, business owners must pay a huge amount for late tax filing or filing it inappropriately. So, hiring a bookkeeper who can help you save money by filing taxes timely without any errors is mandatory. Also, the bookkeepers will record the financial statements properly, spot duplicate entries, and point out when you are spending more than you are earning.

6. Assist you in Handling Cash Flow Smoothly:-

Being a business owner, getting occupied with other financial tasks in the company is very common. But, sometimes, the business owners need to realize that there are some pending payments from the client end. As a result, the delay in the payments might cause a severe impact on the cash flow, as you need to keep it updated.

Having a bookkeeper for your company will keep you updated by sending reminders to your clients regarding the late payment. As a result, this will help businesses track the cash flow statement properly. Thus, it would give you a clear picture of your company’s financial health.

7. Eliminates the Cost Spend on Financial Obligations:-

Many small businesses think handling all the business financial tasks alone will help save their money. But, the reality is that hiring a professional bookkeeper will help you save money and tell you where to invest to get more profits. With the help of a bookkeeper, you can reduce the human error risk, missed payments, late tax filing, and delayed accounts receivable.

As it is said, time is money, so spending time on the growth and expansion of your business will take it to another level. Hurry up before hiring a bookkeeper who fits your business is too late.

Related Page: Cash Flow Projection

Wrapping It Up!!

We hope this post teaches you why hiring a Professional Bookkeeper for your business is beneficial. Picking the right one from your company will help you make better financial decisions, which would benefit the organization’s growth. However, if you still want to get any additional information, feel free to talk with our experts via live chat or email support facility.

Accounting

Top 10 Accounting Software For Small Business Of 2023

Accounting software is crucial as it helps small businesses handle their finances and account-related tasks. Also, it streamlines the daily accounting tasks so that you can focus on the other important section of the business. Out of many accounting software available, it becomes difficult to pick the best one that fits your requirement. Considering this, we have generated this post in which we have discussed the top 10 accounting software for small business of 2023.

Want to gather more information regarding top 10 accounting software for small businesses or Online Accounting Software? If that’s so you can have a one-to-one consultation with our experts through live chat and get an immediate response. 

Learn More Details About Top 10 Accounting Software For Small Business-

If you cannot choose accounting software, you must use it for your business. Don’t panic!! Here, we have provided you with a list of the top 10 accounting software for small business of 2023 or Accounting & Bookkeeping Software Tools. This will help you make the best decision that suits your needs.

1. Intuit QuickBooks :- 

QuickBooks Intuit is the widely-used software that small and medium-sized businesses use to do their accounting tasks easily. Also, it provides various features consisting of mileage tracking, sales tax calculation, and bank reconciliation.

Moreover, it also provides its users with a payroll feature to pay the employees on time. It is the best software that not only handles your accounting tasks but also helps in managing the bookkeeping also. Apart from this, it also allows you to schedule payments to save precious time and update customers on billing progress.

2. Xero :-

It is another accounting software designed for small businesses, accountants, and bookkeepers. Moreover, it provides its users with advanced features to handle their accounting tasks smoothly. Apart from this, it also helps in reducing manual tasks by automatically replicating billing details. Other features of accessing this application are:

  1. You will get real-time tracking of your expenses with this accounting software.
  2. It helps access and monitor the mileage from anywhere and at any time using the mobile application.
  3. Allows the users to generate easy but informative reports for monitoring the growth of the business.

3. FreshBooks :-

FreshBooks allows small businesses to customize the charts of accounts to get a clear vision of the company’s growth. Also, it assures that the users are paid on time via bank integrations and online payments. Moreover, it also provides you with a feature using which you can set up reminders using customizable settings.

Using FreshBooks, you can simply establish different reports that will help the business owners to make the strategy for next time. You can respond promptly to your clients using the mobile application without any further delays.

4. NetSuite :-

The cloud-accounting software automatically consolidates general ledgers and inserts all the data to customize the reports. Using this software you can easily record close cycles via systematized closed checklists. Also, it helps streamline payments by connecting Suite Payments to banks or accounts. Apart from this, it also provides built-in solutions that integrate with the accounting software so that the clients can easily do everything in one place.

5. Sage50 Cloud Accounting :-

Sage 50 Cloud Accounting is the one-stop solution for small and medium-sized businesses to manage finances. It allows users to link their bank accounts to the accounting software so that they can easily do online banking. Doing so will help you download the latest bank transactions, and also, it will help you in keeping track of the business processes.

Moreover, it also allows its users to pay their vendors electronically or by printing checks. Using this software, you can also reconcile the bank statements to get a proper view of the accounting.

6. Zoho Books :-

Zoho Books is another topmost accounting software that automates workflows and helps track expenses. Also, it provides an inventory management feature to keep track of the goods stocked, and you can also evaluate the number of goods that must be restocked. Moreover, it consists of other features, including: automated workflows, recurring transactions, and project management.

It also provides an interactive trial version so potential users can easily access the interface. You can now prepare the invoices within no time, and there’s no need to verify the details. You can also handle your tasks and receive live updates anytime on your device.

7. Wave :-

It is an outstanding software that helps small businesses with top-notch accounting features and functions. Moreover, it allows users to send invoices just with one single click. The best thing is that the invoices and payments get automatically recorded and synced using this accounting software. Thus, this ensures easier and error-free bookkeeping.

Wave software helps prepare the instantly monthly and yearly reports on the mobile application. Also, it allows the users to monitor customer communications via its informative history records.

8. AccountEdge Pro :-

It is the top-rated accounting application that helps businesses manage their accounts. Using the AccountEdge Pro accounting software, you can manage your banking, credit card, and expense account easily. Also, it helps the users in tracking their expenses. Moreover, it helps in tracking the business overview simply yet informally.

9. AccountingSuite :-

AccountingSuite software enables small businesses to create invoices, pay bills and manage accounts. Bank connectivity is also an advanced feature that allows you to connect your bank account. Thus, it helps in managing your bank-related tasks easily and conveniently. Moreover, it includes robust security and upgraded features that enhance your accounting experience.

10. FreeAgent :-

FreeAgent is amongst one the top 10 accounting software for small businesses that reduces the efforts of manually maintaining the accounts. Also, it provides you with instant profit snapshots without preparing the report and looking at how well the business is running. Moreover, it reduces the time by establishing one invoice from various estimates.

Related Page: Accounting Services For Small Business

Wrapping It Up!!

We hope now you can easily choose the best software among the top 10 accounting software for small business of 2023 or Best ERP For Small Business. However, if you require any additional help while choosing the best software as per your needs, consult our professionals through live chat.

Accounting

An Essential Guide On The Difference Between a Bookkeeping And Accounting

There’s a common query about what’s the difference between Bookkeeping and Accounting. Are you confused between the two as well? If yes, continue reading this insightful and informative blog to understand the two different terms in detail.

Need professional assistance to understand the QuickBooks mechanism for Bookkeeping and accounting? If yes, connect with us anytime anywhere and reach out to our QuickBooks team.

The thin line between accounting and Bookkeeping is slowly declining. Agree? With the advent of accounting and bookkeeping application programs, like QuickBooks, some accounting elements are being slowly immersed into the bookkeeping process. Simultaneously, the bookkeeping application can now induce financial statements, which were earlier part of the accounting process. However, there are still many differences between the two processes. So, let’s continue learning the two specifically.

QuickBooks Bookkeeping: A Quick Introduction

Basically, Bookkeeping can be defined as a series of daily operations of your business, including business financial tracking, recording, organizing, etc. A well-maintained bookkeeping practice helps business managers record their business financial data based on the date, figure, and business category. Eventually, they can easily track each and every purchase of their inventory along with accurate sales, payments, and receipts.

To understand Bookkeeping better, you need to pay attention to the following points:

  • Whatever data has been provided by your business bookkeeping, management can’t make decisions based on that data.
  • The process of Bookkeeping helps business managers keep all their financial transaction records symmetrically and properly.
  • An accountant generally oversees the workflow and management of bookkeepers. Also, bookkeepers must be accurate in their financial records.
  • Bookkeeping doesn’t allow the preparation of financial statements. However, Bookkeeping also doesn’t require any skill sets.
  • Bookkeeping managers don’t need to do any deep analysis for operating their business financial operations.
  • You can find two sorts of business bookkeeping: single-entry and double-entry.

QuickBooks Accounting: A Brief Description!

Business managers record, classify, analyze, and present their company’s financial transactions, and this process is called Accounting. This accounting process basically converts a business’s regular financial information into a managed database that helps accounting managers understand their company’s incoming and outgoing cash flow.

If your business is running with a well-managed and proper accounting, you can easily track your company’s financial health based on the outputs of your investors, regulatory authorities, and creditors. These outputs are reported periodically, including your balance sheet, cash flow statement, tax reports, and profit and loss statements. The major role of certified accountants is to manage more complex financial operations.

Take a look at the following points to learn accounting with greater insights:

  • Accountants provide financial data, which is important to make decisions by your company’s management.
  • Accountants estimate the company’s financial situation and later communicate the financial information to the relevant authorities.
  • Since accounting is an analytical and complex process, it requires a special set of skills in the particular accountants handling your business.
  • The accountants use the information gathered by the bookkeepers to analyze and translate that financial information into data and then convert it into reports.
  • During the accounting process, all your business’s financial reports are prepared.
  • Whatever loan proposals you want to make or prepare your company’s budget, the accounting process helps managers to do so.
  • If accountants wish to be entitled to Certified Public Accountants, they must have enough experience and the required education for the same.

Understanding the Concepts on the Difference Between a Bookkeeping And Accounting

Bookkeeping Accounting
Bookkeeping is the process that is used to record and categorize the daily payments as well as expenses.  Accounting is the process that uses the information collected by the bookkeeper and uses it for preparing the adjusting entries.
Moreover, using this accounting practice you can easily send customer invoices and record payments received.  It is the practice that is initiated to analyze the actual costs of the operations.
The bookkeeper prepares the monthly financial statements to know the actual financial status. The accountants examine and analyze financial statements for better performance.
The main focus of this practice is to provide you with the year-end financial statements and tax documents to the accountants. The main focus of the accounting is to file the tax returns, conduct task planning and provide tax advisory.
It helps in processing the payroll so that you can handle the payroll-related tasks easily. It helps in assessing the financial status of your company and helps in preparing the financial forecasts.
Additionally, it helps the users to conduct the bank reconciliation every month. Hence, it helps you in detecting any discrepancies between the accounts so that you can maintain the accounts properly. The accounting provides its users with the essential information to the business owners that helps them in financial decision making.
You can also prepare the books for the accountants so that they can easily maintain the cash flow. The accounting helps the users to perform the audit. Doing so will help the accountants in finding the discrepancies between the financial statements to improve the financial status.

Related Page:  Outsource Bookkeeping for Small Business

Particular Functions of Accounting & Bookkeeping

So, we hope you have understood the basic concepts of both accounting and Bookkeeping and the difference between the two. In this section, we will discuss the major roles and functions of both processes for better learning. Continue reading!

Notable Functions of Accounting

The accounting process is mainly and broadly transactional, and that’s why it is considered a subjective process. The following are the principal roles of accounting:

  • Review your business’s financial statements.
  • Analyze and accomplish your company’s income tax-related operations.
  • Accounting plays a prominent role in analyzing your business’s cost of operations.
  • Help business owners understand their financial operations and make decisions.
  • Run and customize financial reports as per your balance sheet, yearly reports, and profit and loss statements.

Fundamental Roles of Bookkeeping

Bookkeeping is the key process to running any business successfully, with maintained financial records based on daily transactions. We have listed a few main functions of Bookkeeping.

  • Bookkeeping helps business managers maintain and complete their payroll-related tasks and operations.
  • Help business managers post debits and credit information.
  • With daily Bookkeeping, managers can easily track and balance their company’s subsidiaries, historical accounts, and general ledgers. Maintaining general ledgers is also a main function of the bookkeepers.
  • Produce and update invoices in real time.
  • As we noted above, one of the prominent roles of Bookkeeping is to record your financial transactions to help business owners handle their finances.

Accounting & Bookkeeping Workflows in QuickBooks Application

The QuickBooks application is known for handling the bookkeeping and accounting operations and helping business managers seamlessly maintain their financial workflow. Now, both the accounting and bookkeeping processes comprise different workflow features in the QuickBooks application. Let’s have a look:

Accounting Workflows in QuickBooks

  • Creating and emailing invoices to clients and customers.
  • Receiving and recording payments for invoices in QuickBooks.
  • Customizing reports and estimating based on profit and loss statements.
  • Manage items and inventory with deep analysis of the cost of goods sold and in-stock quantity.
  • Creating bills and assigning expenses.
  • Maintaining customer databases with real-time information.

Bookkeeping Workflows in QuickBooks

  • Automatically track and manage your company’s sales transactions.
  • Maintain a record of your clients, customers, vendors, and inventory information.
  • Another bookkeeping workflow is to record and categorize the transaction information into financial account data in QuickBooks.
  • In QuickBooks, the general ledger records all your business activities.

Summarizing Everything..!

We hope you have learned about accounting and bookkeeping processes with this insightful blog post. However, if any query or confusion is bothering you, you can freely approach our QuickBooks professionals via Live Chat Support. Our experts will share their expertise to make you understand everything in detail.