KPMG Spark Blog
Picking up the skills of bookkeeping and accounting can be time-consuming and difficult. Understanding the difference can help you focus your spending on what is most necessary, what you can do yourself, and what KPMG Spark can help you with. Here, we’ve laid out the differences between bookkeeping and accounting so you can get back to your business and do the things you enjoy.
Starting your own business often starts with a passion. Whether it’s opening up your own beauty salon or opening up a clothing store, your business is yours and you should be able to work with what you love. Having the plan to be your own boss is great, however, we still have the finances to worry about - we want to make sure that we can make a profit from our dreams and goals! While starting and managing your business, there are a million things on your plate to keep you busy.
While the lines between bookkeeping and accounting are starting to blur, both are essential financial functions and there are key differences that are important for any start-up or small business to be aware of. To put it simply, bookkeeping is the record-keeping that accountants utilize to analyze and record the financial results of the company.
The work of bookkeeping professionals is vital because it can affect so many different aspects of the business.
Bookkeeping organizes a company’s data by keeping records of the financial affairs of a business. Every business needs to practice bookkeeping in order for leaders, accountants, lenders, and/or analysts to make future business and financial decisions. Bookkeepers typically do not make the financial decisions for the business but their work is essential for the decision-makers overseeing the business and accounting. Bookkeepers collect and organize record daily financial transactions. Because of the need for accuracy by the bookkeepers, an accountant often oversees their work.
As we said above, the work of these bookkeeping professionals is so vital because it can affect so many different aspects of the business. Whether it is preparing tax returns for the Internal Revenue Service (IRS) and/or state and local taxing authorities, budgeting for the next year, presenting information to investors, or simply wanting to stay organized as a business owner, bookkeeping is an essential function for any business.
Accounting, compared to bookkeeping, takes a more directive role when it comes to finances. While bookkeeping keeps track of all financial transactions, accounting is where you take all this financial information and apply it to your business and make decisions accordingly. Accountants prepare tax documents and evaluate the financial standing of a business. Accountants also apply their skills to help the company manage its business - this can be, for example, by analyzing trends (increasing revenues or unusual expenses) or determining if one product line of a business is more profitable than another.
This analytical process is an important part of accounting and is why extensive training and schooling is required to become a certified public accountant (CPA). For a small business that has an employee with some accounting experience, it may be possible to handle the accounting functions in house.
Where does KPMG Spark fit into this you might ask? Spark is dedicated to small business bookkeeping. While accountants are responsible for the entire accounting process, a bookkeeper is generally responsible for the recording and organizing process. Having your own bookkeeper for your business is valuable to help keep your records ordered so you can do more for your business and get back to why you started your business in the first place. Bookkeepers are also generally less expensive than accountants. By outsourcing your bookkeeping to Spark (which may be expensive than an in-house bookkeeper), you can have your records clear and organized and still make all your important business decisions. For larger businesses with many assets and resources, a dedicated accountant can be necessary—but for a small business, a dedicated bookkeeper is largely sufficient for its needs and generally more affordable than an accountant - that’s the value KPMG Spark brings to your business.
This blog article is not intended to address or provide advice concerning the specific circumstances of any particular individual or entity and does not constitute an endorsement of any entity or its products or services.
Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.
The following information is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.
Sign up for our newsletter
You may view doing your company’s bookkeeping as a point of pride, or simply as a way to save money. But there are many costs associated with “do-it-yourself” bookkeeping that business owners often overlook. Join us to see how outsourcing your bookkeeping can help you and your business.
Entrepreneurs often start out trying to do their own bookkeeping but quickly realize they need a bookkeeping solution that not only makes it easy, but also one that addresses their evolving business needs — such as managing cash flow as their business grows. Let's take a closer look at how KPMG Spark can help your business.
The insight provided by an updated, thorough examination of upcoming cash flows can help business owners make more informed decisions and best leverage the cash they’re generating. Let’s look more closely at some leading practices for generating a cash-flow projection and how it can help your business.
Getting employees on board with change can be challenging – even if everyone involved knows it’s for the better. This was at the forefront of our minds when we first created KPMG Spark.
KPMG Spark is always listening to small business owners to learn more about the resources and tools they need to help their businesses succeed. The Spark team listened to what our clients had to say and recently launched KPMG Spark version 1.1.
With organized, real-time accounting, a complete picture of critical financial data, and expert recommendations from a trained professional, the Hobans can continue to provide care to every patient while creating a robust and sustainable business for decades to come.
Maintaining a healthy business cash flow is one of the most important building blocks for any business to achieve meaningful growth. Join us so you can scale your business and make big purchases with confidence.
To alleviate tax season stress, KPMG Spark has launched a Tax Tips blog, specifically designed to give small business owners an easy place to find crucial information and deadlines.
Doing your own taxes can seem like the optimal solution, but we can become our own stumbling blocks when dealing with important financial information. Join us to see the benefits of implementing an automated tax system through online solutions.