Bookkeeping is the day-to-day recording and organizing of your financial transactions. Accounting uses those records to prepare statements, give tax advice and support planning. Bookkeeping comes first, because accounting work is only as good as the records behind it.
1Bookkeeping in plain words
A bookkeeper records what happened: sales, purchases, bills, payments and payroll. The work includes categorizing transactions, reconciling bank and credit card accounts, tracking what customers owe and what you owe, and producing basic reports.
The goal is accurate, organized records you can trust at any time.
2Accounting in plain words
An accountant takes those records and turns them into analysis and advice. That can include preparing financial statements, filing tax returns, planning for taxes, reviewing your structure and advising on big decisions.
Accounting often involves credentials and legal responsibilities, such as a CPA signing tax returns.
3Side by side
- Bookkeeping: records and organizes. Accounting: interprets and advises
- Bookkeeping: daily and monthly work. Accounting: periodic, often quarterly or yearly
- Bookkeeping: accuracy of records. Accounting: tax strategy, compliance and planning
- Bookkeeping: monthly reports. Accounting: tax returns and financial analysis
Think of bookkeeping as keeping score during the game and accounting as studying the game afterward to plan the next one.
4Which do you need first?
Most small businesses need bookkeeping first. Without accurate records, an accountant has nothing reliable to work from, and you pay more for them to sort it out. Once your books are clean, a CPA can focus on tax planning and advice.
Many owners use both: a bookkeeper keeps the books current each month, and a CPA prepares the tax return using those records.
5Where we fit
Profit Path Solution provides bookkeeping: monthly bookkeeping, QuickBooks cleanup and catch-up, reconciliations, payroll support and reporting. We do not prepare income tax returns. We prepare your records so your tax professional can do their work smoothly.
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