Bookkeeping, Accounting and Taxes

Accountant

The importance of bookkeeping

Bookkeeping is the process of tracking all financial transactions your business makes. Accurate bookkeeping not only keeps your business in compliance with the IRS, it also gives you the information you need to measure success, implement strategic plans and develop future goals.

It is important to make the distinction between bookkeeping and accounting. Accounting is a general term for all the processes that go into documenting a business’ financial transactions. The goal of accounting is to compile, interpret, and summarize all presented financial information over a specified time period. Bookkeeping is an important aspect of accounting, and involves recording the day-to-day of a business’ past and present finances.

Types of Bookeeping

Analyzing Data

The two main types of bookkeeping are single-entry bookkeeping and double-entry bookkeeping.  

Single-entry bookkeeping is ideal for sole proprietors, small startup companies, and businesses with minimal or straightforward transactions. 

 

Conversely, double-entry bookkeeping is ideal for larger companies, as well as businesses with accrued expenses or other more complex financial transactions. 

          Balancing The Books:

   Assets, Liabilities, and Equity

A balance sheet, also known as a statement of financial situation, provides an overview of your business’ overall finances.

Abacus

To create this document, you must first “balance the books” — ensuring that your assets, liabilities, and equity are all recorded accurately and balance properly.

 

To make everything balance, remember the accounting equation: Assets = Liabilities + Equity.

In other words, everything your business owns (assets) must balance with your business’ debts and obligations (liabilities) and what is left over (equity).

Explore your Options

Regardless of whether you hire a bookkeeper or manage the process yourself, it’s important to explore your options and find a solution that works for your business. For more information, take a look at our top picks in two categories: bookkeeping software and bookkeeping services:

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Bookkeeping services

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Best for: 

  • Full service bookkeeping service.

  • Business that needs additional high level consulting services like a CFO advisory service.

  • On demand advisors to help you plan and grow your business.

  • Scalable for growing business.

Features:  

  • Integrates with software like QuickBooks, Xero, ADP, Gusto, Shopify, Stripe, Square.

  • Tax filings, payroll, time tracking, workers compensation insurance and more.

  • POS integrations.

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Best for: 

  • Full service bookkeeping.

  • Scalable for growing your business.

Features:  

  • Bookkeeping and tax filing.

  • Integrates with software like FreshBooks, Shopify, Stripe, Square and Gusto.

  • You get your own assigned bookkeeper, enter all transactions, provide monthly reports.

Bookkeeping software

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Best for: 

  • Small business wanting easy to use software for keeping own books.

  • Business with multiple users with access to accounts.

  • Business utilizing outside bookkeeping service.

  • Sending invoices and utilizing other automated features.

Features:  

  • Most well known software, especially with accountants.

  • Allows for professional support from accountants and bookkeepers.

  • Payroll is available as an add on feature.

  • Access to QuickBooks Capital (a financing service).

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Best for: 

  • Freelancers, solopreneurs, self-employed and service providers.

  • Simpler solution that still offers all the necessary accounting features.

  • Tracking and billing for hours spent on projects.

Features:  

  • Integrates with Shopify, Gusto, Google Workspace, Stripe, Bench, others.

  • Time tracking for clients or projects, allowing you to invoice for hours worked.

  • Great customer service.

  • Invoicing, time tracking, reporting, receiving payments.

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Best for: 

  • Medium to large business with more complex accounting needs, with higher level of accounting knowledge and ability.

  • Business with bookkeepers on staff.

  • The most comprehensive accounting features on the market.

Features:  

  • The market leader for decades for a reason.

  • No. 1 choice for most accountants.

  • supports most complicated accounting functions.

  • Payroll available as an add-on service.

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Best for: 

  • Solopreneurs and small business startups.

  • Simplified and less expensive version of accounting software.

  • Online retailers/sellers (Amazon, Etsy, etc.)

Features:  

  • Easier to learn than QuickBooks.

  • Integrates with your bank, Stripe, Gusto, etc.

  • Web based software.

  • Invoicing, purchase orders, inventory.

  • Less expensive and easier to use for most people.