![]() ![]() In this case, use a bookkeeping software that codes your transactions automatically. This approach might not be feasible if you’re a business owner with mountains of expenses spanning across different categories. The chart on the right helps me gauge my best and worst months-valuable information that helps me plan my workload accordingly.įor expenses, I record them on a separate spreadsheet. These grid boxes indicate the money that goes into my business and what else needs to be done. Note the columns below that show my project and invoice status. Whenever I book a new project, I update it immediately. However, if you have an avalanche of transactions and work with multiple employees or subcontractors, you’re better off hiring an accountant every month or quarter.Īs a solo freelancer who works with a maximum of five clients every month, I use a spreadsheet to stay on top of my clients and income. If you have few transactions, manage your own books using a bookkeeping software (or spreadsheet) and hire an accountant to file your tax annually. Should you hire a bookkeeper or accountant? There’s just too much complexity involved!ĭepending on the city you’re in, a skilled accountant can cost at least $70-$100 per hour (or $300-$800 for a flat rate).īear in mind that the more messy your financial transactions are (e.g., coded to the wrong accounts), the more expensive it will cost to hire an accountant to clean them up. Unlike bookkeeping, you need to hire a professional to do your accounting. It certainly beats saving these PDFs in Dropbox and digging through dozens of sub-folders to access them when tax season rolls around. CostĭIY bookkeeping is easy thanks to its administrative nature and the abundance of affordable software.įor instance, upload your receipts via the FreshBooks and MMC Receipts integration if you want to record your expenses. The advice can be as simple as identifying the tax deductions you’ve missed or as complex as advising you to switch from LLC to C-corporation and pay yourself a fixed salary to save on taxes.Īnd yes, in case you’re wondering, using a bookkeeper software or hiring an accountant is fully tax deductible! 3. Without bookkeeping, it’s impossible to draw insights and improve the financial health of your business.Īccountants offer valuable tax-related advice, hence the hefty price tag (more on that later). More importantly, you can accommodate for slow periods and set the appropriate budgets for expenses (e.g., hiring contractors, enrolling in a course, upgrading to a new web hosting plan). When you maintain your books daily, you’re better informed about the money going in and out of your business. Goalīookkeeping keeps your business finances in check. Assisting with external auditors to examine financial statementsĪccountants may also perform bookkeeping tasks.Reviewing expenses to pinpoint cost-saving opportunities.Filing tax forms for month or close year-end process.Unlike bookkeeping, accounting is an analytical process. Reconciling entries for bank and general ledger accounts. ![]() Preparing financial statements like balance sheet, profit and loss statement, and cash flow statement every year.Issuing online bank transfers to vendors and subcontractors.What is the difference between bookkeeping and accounting? 1. ![]() DifferenceĪdministrative (e.g., issue online bank transfer)Īnalytical (e.g., review expenses to identify cost-saving opportunities)Įasy and affordable thanks to wallet-friendly bookkeeping softwareĬosts at least $70-$100 per hour (or $300-$800 for a flat rate) Using the same example above, an accountant can identify cost-saving opportunities from the profit and loss statements created on a bookkeeping software. It aims to help you understand and optimize the financial health of your business based on your bookkeeping records. Don’t let bookkeeping and accounting become a chore What is bookkeeping?īookkeeping tracks your income and expenses so that you’re always in the loop of what’s happening in your small business.įor example, if you want a clearer picture of your income and expenses over a specific period, create a profit and loss statement (a.k.a. ![]()
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