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Business Accounting and Bookkeeping Basics

Provided by SME Solutions Center - Kenya


Bookkeeping

Your business transactions will be backed by financial as well as non-financial records. Bookkeeping, undertaken by bookkeepers, entails the documentation and maintenance of these records. Your bookkeeper keys in data, thus updating your business accounts.      

Accounting

Your business’ financial management and forecast roles fall under accounting. Your accountant will generate your financial reports and also advise you.       

Different Scenarios

You could decide to tackle all your accounting and bookkeeping tasks. Alternatively, you could delegate all your accounting and bookkeeping activities to a professional accountant and bookkeeper. Another option is for you to hire an accountant and bookkeeper but still periodically carry out an appraisal of the arising financial reports and records. These three alternatives are acceptable so long as they serve your purposes.

Option 1: Hire Professionals but Periodically Appraise Reports and Documents

You could choose to execute a supervisory role by letting your accountant and bookkeeper to develop reports and records after which you review the documents. This option is ideal if you do not prefer to fully delve into the numbers or if you are occupied elsewhere. Arrange for periodic meetings with your accountant or bookkeeper where you jointly go over the documents.  This could be on a monthly or quarterly basis.

Option 2: Fully Handle Your Accounting and Bookkeeping Tasks

You could opt to tackle all the accounting and bookkeeping tasks. You are advised to get hold of a template accounting program such as QuickBooks, Peachtree Accounting, or Microsoft Accounting. You could as well go for personalized accounting software. The choice is yours. You might not have the technical expertise required to install the software. It would thus be convenient and prudent to hire a professional, a knowledgeable accountant or bookkeeper, to do the installation. Proper installation will guarantee appropriate accounting charts and reports. In this role, you will be responsible for generating your tax documents. Your chosen tax program could thus integrate with the accounting software you are using.

Option 3: Hire a Bookkeeper and an Accountant but Still Handle Some Tasks    

In this case, you are advised to purchase a customised or template accounting program.  These programs are time saving as you only enter the data and get organised financial reports.    

Bookkeeping refers to the documentation of various business transactions. Your bookkeeper will create and maintain bookkeeping records. Accounting denotes the financial forecast and advisory tasks carried out by your accountant. As a business owner, you will have to deal with an array of bookkeeping and accounting tasks. You could be fully comfortable with dealing with the numbers. In such a case, you could handle all your business’ bookkeeping and accounting tasks. You are advised to purchase suitable accounting software for this undertaking. After you key in the necessary data, the software performs the technical analysis tasks, thus giving out charts and pictorials. In case you prefer to handle only a small bit of the bookkeeping and accounting duties, hire an accountant but periodically review the professional’s work. Owing to other commitments, you could as well delegate all the bookkeeping and accounting tasks to the relevant professionals.        

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