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/

Building a Quickbooks-Centric Smart Back Office

Accounting is a major aspect of every business. Despite the area of business or trade, every organization has to maintain and record its daily proceedings and transactions to calculate taxes. Actually, it is a lethargic and time-consuming process to maintain such data in a written form. The accounting entries are not only focused on calculating the tax, but also to bring down the tax liability through a legal route.

With the introduction of QuickBooks accounting system, there has been an ample change in the method of accounting and bookkeeping. This software is making financial recordings and analysis easier for the business owners. It is an accomplished system which is not only efficient in accounting but also flawless when compared to manual procedures.

How Is QuickBooks Helpful To Earn More?

In this tech-driven world, you can’t sustain the challenges unless you are tech-ready. It not only needs acquaintance with the latest technologies or their integration into processes. In fact, it goes well beyond that. Technology helps the companies in making data-focused decisions. Perhaps, the software which processes financial reports and generates other important statistics empowers the business owners to make firm decisions for growth.

It relies on an automated system that integrates invoices, collections, bill payments, payrolls & salaries, time tracking, job costing, and other input information. This system can streamline all the data sets. It is largely helpful in importing data from different places at a centralized spot. Accounting professionals can easily monitor this information and work accordingly. They can make important decisions and plan strategies to enhance their profitability.

This is truly an incredible change in the accounting procedures. The most competent bookkeeping and accounting services can increase output in a business. You can make more money if your business is backed by an intelligent financial team which can promptly take data-driven decisions. Such software is very useful in this competitive world of business. When the tasks related to bookkeeping are handled by this software, you can concentrate more on your core business for satisfying clients and increasing sales.

Why Is QuickBooks Prominent?

An expert team is constantly engaged in inventing and evaluating various mobile-based applications and web-based tools that can be easily integrated with QuickBooks to provide solutions for small businesses. It is seamless software which can easily assimilate with financial management functions of business and provide the desired results at a lightning speed.

How to Develop a Smart Back Office?

To enhance your decision-making ability, it is mandatory to understand what will be your crucial data. Also, you must know what facts and figures are important for your business? Customized graphs or charts and performance indicators monitored by scorecard are also vital for every business. QuickBooks manage your accounting and bookkeeping in such manner that it can provide statistics of every financial record immediately.

In this regard, it is important to determine the needs and optimize or design the software that can capture every data which is important for your business. It should be focused on delivering key financial reports automatically.

The Objective of Smart Back Office:

Ideally, a smart back office helps in measuring the important metrics like KPIs in your business. It helps to understand the significance of financial reports. At the same time, it processes the data on a daily, weekly, quarterly, monthly, or annual basis to ensure proper decision-making at every level. You can keep score of your business at every stage by using a smart back office solution.

At Infognana, we offer customized bookkeeping and accounting services that suffice your needs of financial management.

Benefits of Using Double Entry System in Bookkeeping and Accountancy

Long before the advent of computers, organizations used to maintain their financial transactions manually in paper journals that were totaled at the end of each month. This total amount was transferred to the General Ledger that was divided into specific accounts.

The method of posting transactions to these Charts of accounts is known as Double Entry bookkeeping and accounting. It needs debit and credit of the same amount to tally the total accounts at the end of the year.

This system of bookkeeping was prevalent in the early 12^th century as well. Now, it is globally accepted as the standard for maintaining the accounts. Though, the industry has tremendously evolved since then. Many new technical terms have been added to this system and it requires a comprehensive approach to understanding them.

Over the years, the banking industry has further transformed the accounting systems. Incidentally, it has even complicated the technicalities of accounting and bookkeeping. The bank balance is a debit item from the perspective of an accountant but the same amount is a credit balance for the bank because it owes this money to the depositor. This double entry system can be best understood as the system where every transaction has a dual impact. It implies that a single transaction increases the financial profit of the seller and reduces the same for the purchaser.

Mostly, a financial transaction is recorded on both sides of the balance sheet. For instance, if a payment is made, the bank balance reduces resulting in the decrease in assets. At the same time, paying off a creditor results in a decrease in the liabilities as well. Despite its complexities, double entry system of accounting has multiple advantages for the modern businesses. They are:

Improves the Financial Performances:

In this system of bookkeeping, you can ascertain the impact of business administration and management on its profitability expressed in numerical values. It presents a clear statement of profit and loss as well as assets and liabilities held by the business at the end of each year. With availability of this information, it becomes easier to take proper actions and plan strategies to increase the profits and decrease the losses.

Facilitates Accuracy in Accounting:

Due to double entry of each transaction, the accountant can easily run a mathematical check ensuring that every transaction has been recorded correctly under the right head of account. The trial balance with an entry of each account ensures this accuracy. All the financial accounts are correctly listed in this sheet and tallied with the transactions. If difference between the total of each side comes to zero, the entries are treated as accurate.

Represents True and Fair View of Financial Status:

The best advantage of using the system through automated software is that it represents a true and fair view of the company’s financial position. The reports are generated in a format that facilitates financial management. Also, it ensures that every primary entry was correctly recorded in the system and was rightly interpreted by the trial balance.

The businesses are advised to maintain the double entry system of bookkeeping services company for improved accuracy and proper maintenance of accounts using proper sales day book, purchase day book, charts of accounts, and balance sheet. At Infognana, we provide advanced accounting software that ensures greater efficiency and accuracy in bookkeeping system of your company.

5 Steps for Selecting the Best Accounting Software for Your Start-Up

Handling the accounting records manually can be intimidating in this digital age. Even if you are using the spreadsheets, you may not get the desired level of efficiency. As a start-up business, using the accounting software with automation features will be much helpful. It will reduce the time spent on redundant data entries and bring higher efficiency in your accounting systems.

Mostly, the accounting software is easy to use even for those having no or little experience of maintaining accounts. There are many companies offering the best software for bookkeeping and accounting. However, it must be selected according to your requirements. Here are the steps that must be considered in this regard:

Understand Your Individual Accounting Requirements:

The requirements of software in your start-up business are centered on two major factors, viz. your budget and software features that your business requires. The accounting software offers much technical functionality for management of your finances and accounting processes. It provides multiple features like ease of operation, automation, tax preparation, estimate creation, multiuser interface, mobile access, and lots more. However, you should choose the features specifically required by your business.

If you are in a budgetary crunch, you can opt for the free version of accounting software offering some basic functionality. You can later upgrade to the paid version offering comprehensive solutions.

Take Recommendations and Referrals:

Before investing in any software for bookkeeping and accounting services, it is always advisable to ask for referrals and recommendations from the other business owners in your industry. They can offer you better advice about different offerings and vendors in the market. You can also seek help from the online review sites for getting proper suggestions on this selection.

Check the Customer Services and Tech Support:

Using this software may seem easier but handling technical glitches, most certainly, is not. It requires expertise and experience of the highly skilled developers working extensively in these products. Hence, you must ask about technical support offered by the vendor. Secondly, their customer services should be available 24/7 to help you overcome the issues that hamper your accounting capabilities and efficiency.

Ask For A Free Trial:

Once you have narrowed down your options to a selected few, it’s time to ask for a free trial from each vendor. This will help you assess their software on various parameters and see if they can suffice all your business requirements. Mostly, the developers offer this option to sign up for a free trial on their portals. If they don’t make such an offer, you must reach out to them and ask for one.

Indulge Your Accountant In Selection:

Accounting software is designed to simplify the job of your accounting and bookkeeping department. It can’t replace the accountants. In fact, their suggestions matter a lot while making this decision. Hence, ask for their recommendations because they have dealt with many such software solutions. They can tell you which software serves the accounting needs of your startup in the best ways.

At Infognana, we have developed an advanced accounting software solution that caters to the multiple needs of our clients. Our accountants will help you choose the right software based on your business needs.

How to Tackle the Long Overdue Invoices?

Nothing can be more nightmarish for a small business than the long overdue invoices. A healthy cash flow is all that you need to stay in the business. But, the reality is that invoices are seldom paid on  time and you are in catch 22 every time your own bills become due.

The problem is aggravated by the fact that you may not be comfortable chasing the money and asking your clients frequently about payments. In such situations, you have to think rationally and tackle the unpaid invoice without being tongue-tied. Here are some simple fixes to do that:

Make your Payment Terms Clear:

Before you expect anything from the clients, it is essential to make clear payment terms and stick to them. You can either go for a 30-day payment term which is sort of a norm for many industries or opt for an immediate payment. Set the rules according to your requirements of cash flow management so that your business is not affected. At the same time, it is significant to explain these terms of payment to the client as well.

Consider Charging Interest on Late Payments:

Late payments can be penalized according to the government rules and legislations as well. It is termed as Statutory Interest that may go up to 8% on the late commercial payments along with some debt recovery charges. You can make your own set of rules for charging interest. It can be extra 2% for payment after 30 days or a 3% delayed payment fee for overdue invoices. The choice is yours. And also, make it known to the client before you start working on the project.

Don’t Chase Hastily:

After the 30-day payment period lapses, don’t get reckless. Have patience and allow a grace period of 2-3 days before you pick up the phone and talk to the client. When you call them up, maintain a friendly tone because you may not like to lose a client with your rudeness. You can also send some  friendly reminders through emails with a warm tone. Attach a copy of the invoice with this email. If it doesn’t work, send a statement citing your payment rules and charges for late payment. This strategy mostly works. Picking up the phone and charging interests should be your last resort.

Consider Upfront Payment:

If none of these work and you want to get rid of late payments forever, this is the best thing you can do. Ask your clients for an upfront payment. Don’t start the work until they clear the invoice. Convey your expectations to the client even before taking up the project. At the time of discussing the work details, talk about the payment terms also to avoid any misunderstanding later. You can also stop working on their project at any point if the payments are not cleared within the stipulated time.

Offer Discounts:

You can make the deal lucrative for the clients by offering discounts on upfront payments. Tell them that you will offer 10% discount as a ‘thank you’ gesture for advance payments.

In this context, you can also seek the automated and professional accounting and bookkeeping services at Infognana. We can take care of your accounts while you take care of your business.