What is the difference between bookkeeping and accounts payable

Statutory Paternity Pay is the amount of money that must by law be paid to the mother of a new baby while she is away from her job. Statutory Paternity Pay is the amount of money that must by law be paid to the father of a new baby while he is away from his job.

Whether you're self-employed or running a small business, you need to stay on top of your business finances. While you can delegate your company's financial affairs to your accountant , it's still important to have a good grasp of the essentials-such as basic accounting terms and concepts. With this knowledge, you'll be better able to communicate with financial professionals, team members and potential investors.

To help you get started, we've written up an introductory guide to accounting terms you need to know:. This refers to money owed to the business by its creditors suppliers, vendors and other service providers. These are recorded as a liability on the balance sheet. This refers to money owed to the business by its debtors clients and customers. The amounts are recorded as an asset on the balance sheet.

Accruals are amounts that are unaccounted for at the end of the accounting period. These can be expenses that have been incurred or revenue that has been earned, but aren't yet recorded in the accounts. Any resource that is owned by a company. There are two main types of assets: current assets and non-current assets.

Current assets are expected to be consumed within a year, while non-current assets are expected to be held for longer than a year.

The balance sheet shows how much a business owns assets , owes liabilities and the amount that is left over for its owners owner's equity at a point in time. The chart of accounts is a listing of all the accounts used in the general ledger of the business. An accounting entry that increases a liability or owner's equity account, or decreases an asset or expense account.

The term may also be used to refer to an entry on the right side of a T-account. An accounting entry that increases an asset or expense account, or decreases a liability or owner's equity account. The term may also be used to refer to an entry on the left side of a T-account. Common methods of depreciation include: straight line , units of production , sum-of-years-digits and double-declining balance.

Dividends are a payment of profit that a limited company distributes to its shareholders. It is the money remaining after all business expenses and liabilities, as well as outstanding taxes including VAT and Corporation Tax have been paid off. The accounts are classified into three categories: assets, liabilities and equity accounts.

There are two main types of liabilities: current liabilities and non-current liabilities. Current liabilities otherwise known as short-term liabilities are due within a year, while non-current liabilities are due after a year. Firstly, it refers to the net amount of finances an owner has invested in the company.

Otherwise known as net profit, net income refers to a business' financial position when the total revenue is more than the total expenses. Present value is a calculation that measures the current value of a sum or stream of money to be received in the future, through adjusting for inflation and interest.

A metric of profitability used to measure the gain or loss that an investment generates, relative to the sum of money invested. A trial balance is a report that lists the balances of all general ledger accounts of a business at a specific point in time. The National Insurance number is a number used in the administration of the National Insurance or social security system. It is unique to each individual, and helps ensure that the National Insurance contributions and tax you pay are properly recorded against your name.

Book a free 30 minute call with an accountant. We'll help walk through setting up your business, switching accountant or any of your tax queries. The primary objectives of Bookkeeping involve storing financial transactions in a chronological manner. Segregating and Posting of Financial data under proper heads and interpreting business from the ongoing financial transactions.

Not possible to take business decisions from the data available from Book-Keeping because most of them are scattered data. As the primary function involves classifying and grouping of data, it is very easy for the management to know the health of the Business and to take unbiased strategies for improvement. Financial statements like Income statements, Balance-sheet; Cash flows are made from the Accounting process. Book-keeping does not require any additional skill set; an undergraduate can do the process.

Accounting knowledge is required due to the complexity and of the process. A person with sound accounting and Finance knowledge is suitable to perform the job. Bookkeeping involves the only recording of financial transactions in a chronological and systemic manner. After the classifications of journal and ledger, proper analysis and classifications are required, which are again forwarded for reporting to different functional segments of an organization.

Bookkeeping can further be divided into two different types, namely Single entry and Double-entry bookkeeping. These are some typical bookkeeping tasks: Recording financial transactions Posting debits and credits Producing invoices Managing payroll Maintaining and balancing ledgers, accounts, and subsidiaries One of the main duties of a bookkeeper is maintaining a general ledger, which is a document that records the amounts from sale and expense receipts.

What credentials does a bookkeeper need? What does a bookkeeper charge? There are, though, three factors that affect your cost: Services needed: The bookkeeping services your business needs and the amount of time it takes weekly or monthly to complete them will affect how much it costs to hire a bookkeeper.

If you need someone to come to the office once a month to reconcile the books, it costs less than if you need to hire someone full time to handle your day-to-day operations. Once you know what tasks you need the bookkeeper to do, you should then estimate how long it will take to complete those tasks. Based on that calculation, you can decide if you need to hire someone full time, part time or on a project basis.

Expertise required: If you have complex books or are bringing in a lot of sales, you want to hire a certified or licensed bookkeeper.

Knowing you have an experienced bookkeeper can give you peace of mind and confidence that your finances are in good hands, but it will also cost you more. Local market: The location of your business can also influence how much you pay for a bookkeeper. If you live in high-wage states like New York, you'll pay more than if you are hiring a bookkeeper in South Dakota. What does an accountant do? These are some typical accountancy tasks: Verifying and analyzing data Generating reports, performing audits, and preparing financial reporting records like tax returns, income statements, and balance sheets Providing information for forecasts, business trends and opportunities for growth Helping the business owner understand the impact of financial decisions Adjusting entries "Accountants look at the big picture," wrote John A.

What credentials does an accountant need? What does an accountant charge? How to know when to hire a financial professional It can be difficult to gauge the appropriate time to hire an accounting professional or bookkeeper, or to determine if you need one at all.

Your taxes are complex. If your taxes have become too complex to manage on your own, with multiple income streams, foreign investments, several deductions or other considerations, it's time to hire an accountant. An accountant can save you hours of time and help you stay on top of important matters like payroll, tax deductions and tax filings.

You're spending more time on accounting tasks than growing the business. If you are spending so much time taking care of accounting tasks that you're not able to work on growing your business or keeping existing customers happy, you're doing your enterprise a disservice. You may be able to make more money long term if you leave the accounting to the experts and focus on your growth prospects.

Your business is experiencing growth. Doing your accounting yourself may be fine when your business is small, but if your business is in growth mode, it may be a sign that it's time to bring on someone to help. You could start by contracting with a bookkeeper who balances the books once a month and a CPA who handles your taxes. Then, as your bookkeeping needs increase, you could bring someone on staff.

Additional reporting by Kiely Kuligowski. Business News Daily Staff. Donna Fuscaldo is a senior finance writer at business. Most recently she was a senior contributor at Forbes covering the intersection of money and technology before joining business. Donna has carved out a name for herself in the finance and small business markets, writing hundreds of business articles offering advice, insightful analysis, and groundbreaking coverage.

However, there will still be accounting clerks and bookkeepers needed to fill positions that others leave, meaning those wanting to work in either role can still expect good opportunities finding jobs.

Ashley Donohoe started writing professionally in about career, business and technology topics. She has a Master of Business Administration degree from Western Governors University along with eight years of experience managing all aspects of her small business.

By Ashley Donohoe Updated July 01, The Differences Between Bookkeepers vs. Accountants vs. What Are the Duties of a Trainee Accountant?