What is Bookkeeping?
Bookkeeping is a key process to building a successful business. It consists of recording all daily transactions in an accurate manner.
- Recording all daily financial transactions
- Posting all debits and credits consistently
- Generating invoices
- The maintenance of subsidiaries, general ledgers, and accounts
- Generating and completing accurate payroll records
Maintaining a General Ledger is the main component of Bookkeeping. The General Ledger is the main document where a Bookkeeper records amounts from sales and all daily expense receipts. This is referred to as "Posting". This means that the more sales that are completed, the more the Ledger is Posted. A Ledger can be a specially created document with targeted software, a computer-generated spreadsheet, or just a lined sheet of notebook paper.
The complexity of a bookkeeping system depends on both the size of the business and the number of transactions that are completed daily. All sales and purchases generated by the business must be recorded in the Ledger, as well as any supporting documents that are needed. The IRS has specific instructions as to which transactions require supporting documents..
What is the Function of Accounting?
Accounting is a multi-step process that uses all the financial information generated by a bookkeeper or business owner to produce financial business models using that information.
Accounting is a more subjective process than bookkeeping, which is largely transactional.
- Preparing adjusted entries (i.e., recording all expenses that occurred, but haven't yet been recorded by bookkeeping)
- Preparing all financial statements
- Analyzation of operating costs
- Timely completion of all income tax returns
- Assisting the business owner with understanding the impacts of all financial resolutions
The process of Accounting is to provide comprehensive reports that tie key financial indicators together. This leads to a better understanding of actual company profits, as well as an awareness of the cash flow throughout the business. Accounting turns information into statements that reveal a greater comprehensive understanding of the business, as well as the course the company is progressing on. Business owners often depend on Accountants to help with their tax planning and filing, as well as their financial forecasting.
There are several variations of taxes that business owners need help with, and which SBS Tax specializes in:
- Reporting and filing of Payroll Taxes
- Reporting and filing of State Sales & Use Taxes
- Reporting and filing of Individual, Partnership, and Corporate Tax Returns (PTIN)