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What's The Difference Between Bookkeeping and Accounting?



Bookkeeping

The very basic function of a bookkeeper is to record the transactions of a business in a consistent way.

  • Recording financial transactions and reconciling accounts at the end of each week, month, or quarter

  • Creating and issuing invoices

  • Recording and paying bills on their due date

  • Processing and recording payroll

  • Tracking sales taxes (GST) and filing returns

The bookkeeper is in charge of making sure that all transactions are recorded accurately. The complexity of this job will always depend on the scope of the business such as size of the business, number of transactions to be recorded, and the nature of those transactions.


Accounting

Accounting can be described as processes that use the information recorded by the bookkeeper to produce higher-level information and reports. Services include, but not limited to:

  • Business advisory

  • Preparing adjusting entries to record information such as inventory adjustments, tax estimates, and other accruals (expenses that have occurred but aren’t yet recorded by the bookkeeper)

  • Preparing and analyzing financial statements to help the business owner make decisions

  • Completing income tax returns

  • Tax planning

Accountants aim to provide business owners with an understanding of their financial reporting to drive intelligent and informed decision making. With ur entrepreneurial spirit, we know it can be a lonely road running a business, and we want to help entrepreneurs succeed however we can.


Traditional Costs of Bookkeeping and Accounting

The traditional and most common method of charging for bookkeeping and accounting services is using an hourly rate. The bookkeeper or accountant will track the time they spend on your business in increments of 0.1 hours, add up the time spent and then apply their hourly charge-out rate. Bam, there’s your bill! This means that you are on the clock anytime your bookkeeper or accountant answers your phone call, responds to your email or works on your file in any way.


At current market rates, you’ll find a range of hourly rates:

  • Bookkeepers charge between $35+/hr

  • Accounting work completed by a CPA, you’ll find a range of $250+/hr

This means that the bill for services provided will vary depending on how long it took your bookkeeper or accountant to complete those services. Based on current market rates, you’re likely to see the total cost for services fall within the following ranges. Note that these ranges are generalized.


Bookkeeping

  • Startup/New Business - $150+ per month

  • Small Business - $400+ per month

  • Medium Business - $600+ per month

  • Large Business - $2,000+ per month

Accounting

  • Compilation engagement and corporate tax return $3,000+

  • Review engagement and corporate tax return $5,000+

  • Audit engagement and corporate tax return $7,000+

Under the traditional method, you won’t know the amount of your bill until the work is complete and the service provider has added up all of the minutes spent working on your file. Although this is a common pricing method, we find a couple of things wrong with it:

  • Fear of asking questions - It creates a situation where clients feel that they shouldn’t ask questions or learn from their bookkeepers and accountants because they will be on the clock as soon as the phone is answered. We strive to have a pricing model and create a relationship where there is an open line of communication between us without the fear of a surprise bill.

  • Surprise bills - It can also cause surprise bill amounts when more work was required than expected. Surprise bills kill cash flow for businesses and create animosity between accountants and their clients.

That is why we believe in transparent and fixed pricing for all of our clients - no surprised. As such, it is crucial that TKLL sit down with you to understand your needs. From there we can build a service plan that fits your business needs. For a general sense of our pricing, please refer to our site.


Please feel free reach out if you have any additional questions - we are happy to answer!


Thanks!




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