Bookkeeping…Accounting…Tax Planning… What is the difference?

BOOKKEEPING… ACCOUNTING… TAX PLANNING… What is the difference?

(Bookkeeping) Record and Compile

(Accounting) Analyze

(Tax Planning) Advise

Bookkeeping is self-defined: keeping the books. It?s the process of entering all financial transactions for a business. This essential process demands that the individual maintaining the numbers understands what to record and where to assign it. Accuracy is paramount for the accountant who then reviews these numbers recorded by the bookkeeper to properly present the financial condition of the business. Bookkeeping can be done with a checking account/bank statement/and spreadsheet? a local software on a laptop? or a simple or complex system in a cloud (online) environment.

Accounting is the process of taking basic financial numbers, verifying their accuracy and presenting them in a manner that is understood and accepted by the general financial community (bankers, lenders, financial advisors, tax accountants, other business owners).

Accountants take a higher level look at the business. They design and prepare reports that are useful in helping managers make informed decisions about the business.

• They analyze the financial position and operating results of a business from a study of its sales, purchases, overhead, etc
• They examine accounting records, financial statements, and other financial reports to assess accuracy, comprehensiveness, and conformance with reporting and procedural standards
• They analyze business functions, trends, costs, revenue, and financial obligations projecting revenue and expenses
• They evaluate cash flow and financial risks associated with capital-investment projects

Tax Planning is the process of reviewing the financial condition of a business with an eye towards opportunities for the business owner to benefit from current tax laws. This means simply taking advantage of losses/credits/write-offs thereby reducing an overall tax liability or analyzing financial decisions that could lead to a tax advantage for the company.