Bookkeeping and Accountancy: Their Importance in the 21st Century
Even in the 21st century, bookkeeping and accountancy are important for a company, summarizing their performance. These services can help manage financial data, ensure report accuracy and make companies predict their revenues better. Both can help a company understand its worth and prepare themselves for the future. In this blog, you will learn more about bookkeeping/accountancy and why they are crucial for companies in the 21st century. You will also get to understand more about the differences between the two.
A Modern History of Bookkeeping and Accountancy
The bookkeeping and accounting that you see today is a by-product of intellectual thought, practice, and custom years ago. These practices used by the top companies today have been shaped by two popular concepts. There were two big developments in the 14th and 15th century; the first was the development of double-entry bookkeeping and the professionalization of accounting.
Double-entry bookkeeping became popular in Italy and changed the practice of accounting. Using the unique system of double entry, businesses were able to enhance efficiency and profitability. Over the years, both bookkeeping and accountancy gained a lot of popularity around the world.
What is Known As Bookkeeping?
Bookkeeping involves recording the financial transactions of a company everyday. This practice ensures that the record of individual transactions are accurate, complete and updated. Whether you purchase or sell something in a business, it is essential that every financial transaction is recorded. Companies or businesses with proper bookkeeping services can track every information in their books to make important decisions on operations, finances or investments.
What is Known As Accountancy?
Accountancy is a large field that includes accounting and other financial services. Accountants work to record, classify, and report on transactions for a company or business. Top accountants around the world help companies, governments and businesses to manage their finances.
Accounting involves performing the following tasks:
- To keep track of transactions
- To conduct internal audits
- To evaluate financial data
- To consult on issues such as tax
Differences Between Bookkeeping and Accounting
Some major differences between both these processes are as follows:
- In accounting, you adjust entries while in bookkeeping, you record and classify all the daily transactions.
- In accounting, you assess the cost of operations while in bookkeeping, you send customer invoices and record all the transactions.
- In accounting, you advise business owners on financial decision making while in bookkeeping, you conduct bank reconciliations every month.
- In accounting, you review and assess financial statements while in bookkeeping, you generate monthly financial statements.
- In accounting, you check the financial health and make forecasts while in bookkeeping, you process payroll.
- In accounting, you must examine the company’s financial records, while in bookkeeping, you prepare the book for the accountant.
Why are Both Services Essential For Your Business’s Success?
As a business must manage its finances effectively, they require both bookkeeping and accountancy services. Such services ensure that a company efficiently plans business strategies and enhances their finances over the year. If a company wants to stay at the top of its game, and avoid financial risks, both these services are a must.
Top Points Featuring the Importance of Bookkeeping and Accountancy
The top reasons why bookkeeping and accountancy are required for your business are as follows:
- If you own a business, you must be aware of the requirement for proper tax management. When you are able to file your tax accurately, you are prevented from breaking any compliance obligations. When you follow tax law requirements, you will be obedient to every kind of law. This will provide you with a big advantage when it comes to auditing by the tax officials.
- Bookkeeping and accounting ensures that you achieve accuracy in the financial transactions of your company. You will be able to understand where you receive your money and where it lands.
- Another big advantage of both bookkeeping and accountancy is that you can enjoy better expense management. You will be able to understand from what products and services you are making profit. Using both these processes, you can also transfer your expenses from the ones that are not providing you with any profit and return.
- An accountant and bookkeeper will ensure that there is a consistent cash flow so that you can safeguard yourself from risks. You can do this while enhancing your confidence as a stakeholder and investor.
- Businesses that have bookkeepers and accountants can save money, follow the tax regulations, reduce risk, manage growth, and also plank for the future.
What are Some of the Skills That Top Bookkeepers Must Have?
Some of the top skills that a bookkeeper must have to find success in the market are as follows:
1. Giving Attention to Detail
The top bookkeepers always ensure to remember every small detail. They must ensure that all the books are merged and that the invoice is paid. In a similar manner, they also have to ensure that all these invoices are sent and that they are efficiently and timely checked.
2. Having Good Skills in Basic Math
People who aim to be bookkeepers must have good skills in basic math. When hiring a bookkeeper for your business, you must ensure that they are good in calculations and rarely make mistakes. In short, they should be excellent in every math skill.
3. Having Good Data Entry Skills
Successful bookkeepers always have good data entry skills and are updated with the latest technology. Their job is to accurately add data to the database. Another big advantage of those willing to be bookkeepers is having fast and accurate typing skills.
What Are Some of the Skills That Top Accountants Must Have?
Some of the necessary skills required in accounting are as follows:
1. Having Skills in Preparing Financial Statements
A company’s financial statement provides them with a crystal clear overview of their company’s financial condition every day. An accountant must have the skills to prepare three types of financial statements namely the cash flow statements, income statements, and balance sheets.
2. Having Knowledge in Analyzing Data
Financial data is an essential asset for any kind of business. A strategic plan can help influence everywhere in a company and is required for its success. Top accountants must have the ability to identify the various patterns in business data sets, identify errors and any kind of fraud through their skills.
3. Having Knowledge of Basic Business Practices and Latest Technologies
Popular accountants with a strong business sense can help develop a company’s strategy, inform essential decisions, and work with other departments. When an accountant has the knowledge of these business practices, they can benefit their company in the long run.
Are Bookkeeping and Accountancy Services Relevant in the 21st Century?
Both these unique services are crucial for financial success of a business in the 21st century. This is because they provide the required financial information for better decision making, performance assessment, and more. Such practices ensure proper financial records, lead to better decision-making, and also helps a company comply with all the regulatory requirements.
Bottom Line
It is essential to keep accounting records not only as a legal requirement but to ensure that every company survives in the long run. Before you contact accounting firms in Atlanta, know that when there are proper bookkeeping and accounting services, companies can make better decisions, plan for investments and ensure proper cash flow management. As per the various experts, accounting and bookkeeping professionals will be in heavy demand in the coming years.
