What's the Difference between Bookkeeping and Accounting?

The terms bookkeeping and accounting are used interchangeably, but there are certain key differences that make the former a first step to the latter. Both these functions have a significant role in any company’s financial statements.

The fact is, bookkeeping and accounting ultimately work together ensuring the success of any business. The success of any organization comes down to how well the financials are recorded.

Bookkeeping is the timely and precise recording of financial transactions while accounting is the analyzing and interpreting the data created by those transactions.

Understanding Bookkeeping

The process of maintaining a complete and systematic record of books for a business is known to lay the foundation for effective accounting. The bookkeeping process is the activity of logging every financial transaction of the business and also includes using a ledger to post the details of any sales, expenditures, and their associated bank transactions, the processing of employee payroll and creation of any customer invoice.

In today’s business environment, there is a certain level of overlap between bookkeeping and accounting thanks to accounting software that makes it easy to generate financial reports. There are two methods of bookkeeping:

• Single Entry system of bookkeeping
• Double Entry system of bookkeeping

Understanding Accounting

Accounting transforms bookkeeping records into an actionable and adaptable business plan. It is a business language which gives an accurate information on the financial status of the organization. Accounting is a complete procedure that begins from recording transactions and ends at reporting financial statements at the end of the financial year.

Simply put, the accounting process is providing a true and fair view of the financial statements to its user in a way that is easy to understand at the end of any financial year. Accounting also makes it possible for a company to prepare key tax and other financial documents. It is the best way to measure a company’s financial growth and success. The main branches of accounting are:

• Financial Accounting
• Cost Accounting
• Management Accounting
• Human Resource Accounting
• Social Responsibility Accounting

Key Differences Between Bookkeeping and Accounting

1. Maintaining proper records of the financial transactions of a business is bookkeeping. On the other hand, accounting is recording, analyzing, evaluating and reporting financial transactions of a business.
2. Financial statements are not a part of the bookkeeping process, but of the accounting process.
3. Bookkeeping is the beginning of the accounting process.
4. A bookkeeper performs bookkeeping activities, whereas an accountant performs accounting activities.
5. The management of a business cannot make any decisions with bookkeeping records, but can take critical business decisions depending on the data provided by accountants.

Both bookkeeping and accounting functions go hand in hand. If you do not have a proper bookkeeper then your records for the financial statement of a year will not be in order. Hence, you can say that bookkeeping is an indivisible part of accounting.

If you’re interested in hiring any bookkeeping and accounting services, or just looking for more information on the same, feel free to get in touch with our experts today.

Visit our website at: https://www.infognana.com/services/bookkeeping-accounting-services/

Predicting Cash Flow Into Quickbooks

It is a company’s cash flow forecast or prediction that helps develop your business and keep the going good. Any professional into accounting and bookkeeping will understand the importance of keeping track of all the money coming in and going out. An efficient cash flow forecast will give you a rough estimate of all incoming revenue for a fixed period of time.

While a short-term prediction can help get a clearer picture of the financial scene in the near future, for bigger plans you need a long-term prediction. For those into accounting and bookkeeping services, Quick Books helps work out the anticipated cash flows, and Quick Books can be used to pull together a crucial report with accuracy and consummate ease. Here are a few quick steps that should get you going:

1. First, you need to open Quick Books
2. Simply click on “Reports”
3. Go to the option ‘Company & Financial’ and click on cash flow forecast
4. QuickBooks will pull up and put together a report based on your receivables, payables, and bank statements. What’s more is that you can adjust the report the way you want for a specific period so that your customers do not miss out on any important due dates.
5. Make sure that you do not miss any important documents like purchase orders, invoices or other vouchers as that can make a lot of difference to the report.

The Statement of Cash Flows helps you compare notes with the previous cash flows generated. You can also go to the Reports menu and hit “All Reports” or choose business overview, where you can select Statement of Cash Flows. The report gives you actual figures for cash flow for a specific period, which helps with getting almost 100% accurate forecasts, based on historical data.

Another great feature with QuickBooks most accounting outsourcing companies will love is the Cash Flow Projector that is specially created for giving short-term forecasts. You can get a fair idea of what’s in store for the next couple of months with regard to your company’s financial status, and it also helps you keep tabs on bills and salaries.

There is a “Budgeting and Planning” option under the Company menu where you can click on Cash Flow Projector. You can enter your forecasted cash receipts into the cash inflows section which will give you an almost accurate financial status of your company. Professional accounting outsourcing companies like Infognana are adept at using QuickBooks for forecasting the clients’ financial reports.

Everything You Need To Know About Payroll Outsourcing

A business tastes success when every operation is efficiently managed. Outsourcing the payrolls is a potential option when you need to deliver with diversified functions in your business. For smooth functioning of your company, it becomes necessary to pass on your responsibilities to the right people leaving you with ample time to concentrate on the core client services.

Payroll is an important administrative responsibility shouldered by an accounting and bookkeeping company. It is time-consuming, has countless compliances and obligation, labor-intensive, and burdening for an entrepreneur. Outsourcing this service can be the right option to choose because it can be truly challenging to manage it in-house.

Payroll Outsourcing:

Payroll outsourcing is passing the processing of payrolls to a third-party organization experienced in handling it. A selected package gets integrated into the existing procedure or business infrastructure to deliver their services at each payment cycle.

A study revealed that payroll outsourcing market will grow at six per cent rate in the next five years. Advanced software and enhanced cloud computing will enable service providers to offer efficient services to their clients. Generally, payroll providers offer comprehensive plans for handling pension, simple tax, salary calculation, issue of paychecks, and other end-to-end solutions for employees.

Why Outsource Payroll?

Payroll is a complicated and time-consuming, especially when it comes to calculating salary, categorizing salary perks, and deducting taxes. Due to busy schedules, you cannot give enough time to do the calculations and pay your employees on time. It can significantly impact the productivity of your business.

A non-compliance with various taxations and missing the deadlines can prove costly for a business. The penalty charged on your business will directly impact your profits. Also, HR department will bear the brunt of unsatisfied employees. Instead of recruiting the best talent, they’ll need to concentrate on satisfying the existing staff. This can bring down the performance of your business drastically.

To avoid such severe circumstances, you should choose an accounting and bookkeeping company offering payroll management services so that you can relax and focus on your business while experts are handling your payroll hassles.

Time Your Payroll Outsourcing:

If you are consistently breaching your salary deadlines, it is an alarming sign to outsource payroll services. You are already too late and to bring situation under control, immediate switching is your safest bet.

You should time your decision well before the situation gets out of your control. It is essential to recognize such problems in advance and choose efficient outsourcing solutions to meet your needs. In fact, early outsourcing can save time and money in the long-term and help in growing your business extensively.

How to Choose Payroll Service Provider?

You cannot choose payroll provider randomly because they are not equal in their services. There are some parameters which should be considered before choosing:

Check their level of security and software used. Also, their way of handling errors is important to assess their competitiveness.

You need to evaluate the various kinds of payroll services required. Also, obtain references from previous clients of the providers to check their genuineness.

There is a range of hidden charges and services which are not covered under the payroll packages. You need to do it yourself or pay extra for additional services. Consider all such points beforehand to make your payroll services are cost effective.

Choose a company whose expertise matches your requirements. They should meet your tax obligations and size of operations. Whether domestic or international, payroll organization should be selected according to location.

Infognana is your perfect accounting and bookkeeping company for managing your payrolls more efficiently.

7 Bad Habits That Can Affect Your Bookkeeping Negatively

Bookkeeping of your business is equally important as marketing and other aspects. Without proper bookkeeping and accounting, you may end up making huge losses even if the bottom line of your business is moving excellently. Without maintaining accounts, you may land up in terrible consequences and lose all your earned profits in the form of penalties and interests.

Hence, you should hire accounting and bookkeeping services or maintain the accounts on your own. Often, business owners don’t have enough time to maintain the same. Due to lack of knowledge, many new entrepreneurs make common mistakes in the management of accounts. Here are some of the common habits that can affect your bookkeeping negatively.

1. Improper Procurement of Documents:

Whether it is invoice, receipt, or vouchers, every document should be preserved carefully. Many organizations neglect this part and keep stacking their cabinets in an unorganized manner. But, this can make you miss deadlines. It becomes hard to sort the document in the last month of taxation. At least, you can start scanning these invoices and other documents and save it virtually.

2. Unaware of Due Dates and Deadlines:

It can be a costly mistake to skip deadlines and due dates for submitting reports and other details required by the authorities. As a business owner, you must be aware of these due dates and keep all the reports ready well before it. Set aside a proper time to analyze all facts and complete reports accurately. In this regard, you must know all the important dates of submitting different reports to the tax department.

3. Skip Update on Accounting:

The Trade and Affair Ministry and other related government officials release different notifications at regular intervals. It drives constant changes in bookkeeping and accounting software to customize it according to the regulation. You need to be updated with current rules and the latest version of software to maintain accounts efficiently.

4. Settle Employee Taxes:

In India, settlement of employee taxes is also a major concern for the employers. If you have many employees whose salary falls in tax bracket, you have to maintain records and pay taxes on their behalf. A delay in the process may land you in mess and you have to incur losses in the form of penalties. Hence, try to maintain employee payrolls and tax details simultaneously.

5. Hiring Inexperienced Professionals:

Many times, companies hire new or fresher graduates at an important position to handle all their accounting. This can affect their business prospects negatively. Without any second thoughts, you must hire an experienced and professional employee who can easily manage every circumstance of bookkeeping.

6. Ignoring Accounting Integrations:

The advanced bookkeeping software like QuickBooks is used to feed inventory, bills payment, and other details extensively. Such software offers integration or updates to make it more effective and efficient. You should integrate every new opportunity offered to improve the working through better data synchronization to reduce potential errors.

7. Ignoring Accounting Data

Ignoring the maintenance of accounting data is the worst habit in bookkeeping and accounting. Here, it is important to understand accounting metrics to extract key performance indicators. Such data is important to analyze the progress of a company and future plans to multiply its growth.

These are the common mistakes that you must avoid in your bookkeeping practices. You can avail professional accounting and bookkeeping services of Infognana to bring expediency and accuracy in this process. We are the experts in this field and can bring our experience to your business.