3 FAQs About Bookkeeping

May 7, 2021

The decision to use bookkeeping services is one you will never regret, as it helps streamlines many business practices. If you’re considering hiring your Los Angeles accounting service for bookkeeping work but have a few questions, let this guide help. You’ll find answers to common questions about “maintaining the books.” 

Is Accounting the Same Thing as Bookkeeping?

Bookkeepers are often lumped in with accountants despite providing different services. Accountants prepare income tax returns, offer tax planning help, and review company financial data to identify what needs work and what can be left as is. 

Bookkeepers do not provide financial analyses or tax prep, rather they focus on categorizing business expenses in a general ledger, comparing bank statements to the general ledger to ensure everything is accurate, and creating financial statements. They also collect daily financial data to avoid problems such as paying too much for inventory. Additional bookkeeper services concern accounts payable and receivable, and payroll. 

How Will I Know if I Need Bookkeeping Services?

Many startups and small businesses do not use bookkeeping services, as they are usually not necessary when there’s five or less employees, and limited products for sale. However, it is still a good idea for small businesses to use bookkeeping services provided by Encino tax consultants as their enterprises expand and keeping the books becomes increasingly complicated. 

Your accountant might recommend a bookkeeper as well in light of debit and credit factors, or if you will be audited. It’s also a good idea to work with a bookkeeping company if you do not enjoy keeping up with your business’s finances or have other projects you would rather work on. 

What Information Should I Provide the Bookkeeper? 

Your business’s financial records provide a good place to start, as well as any ledgers you have. Furnish all receipts, invoices, and payroll information, and purchasing records. The more information you can offer, the easier it will be for the bookkeeper to create monthly or quarterly reports. The professional may also want to look at your previous tax returns, particularly your profit and loss statement, to help identify where you can improve financially. 

Take advantage of bookkeeping services from Wallace & Associates, your local accountants in Los Angeles.