Accounting services and functions are what keep a business on track. After all, the point of a business is to generate revenue, so that means someone needs to be keeping an eye on the money that is going in and out of the accounts. But that’s really just the most basic accounting services example. Accountants serve as trusted financial advisors who have the perspective and education to give business leadership advice about big decisions.
Often, business owners want to trust their instincts about decisions like acquiring real estate, making a new hire, or expanding to a new market. And while instinct is essential in business, sometimes a gut feeling isn’t the best indicator to go on. If the decision-maker doesn’t have perspective on the cash flow, tax liabilities, and market conditions, a decision that “feels” right can actually go very wrong.
But with the support of a part-time accountant or accounting firm, even a solopreneur or small business can make the same decisions with significantly more confidence. If you are one of the 23% of small business owners looking for more ways to grow revenue, or the 16% who say getting a handle on cash flow is a challenge, the benefits of working with an accountant will manifest quickly for your business. Another 40% of owners say supply chain and vendor costs have increased during the last six months, while 30% are struggling to make full-time hires. While these issues can’t immediately be resolved by accounting services, they are examples of long-term concerns an accountant can help an owner tackle.
To those who just think accounting is working with numbers, the idea that financial professionals can help a business achieve so much might be surprising. That’s why we’ll start at the beginning by describing the five main things an accountant does and explain everything you need to know to hire the accounting service that is right for you.
What are the 5 Main Accounting Activities?
There are five main types of accounting activities: gathering business financials, keeping financial records, making records more useful, informing financial decision-making, and encouraging financial integrity. Here is how each of these accounting activities is different—and important.
- Gathering business financials to understand the operations and financial condition of a business.
- Collecting and documenting financial records like receipts, purchase orders, and invoices.
- Improving the usefulness of financial records by rearranging, summarizing, and organizing to provide insights.
- Informing financial decision making for a business owner by sharing both reports and the insights of personal experience and industry knowledge.
- Establishing controls for financial accuracy and honesty among employees, vendors, suppliers, and/or customers.
When each of these activities is approached with confidence and organization, the difference for a business can be transformative. Not only are the financials more organized, but leaders at the business feel more confident making decisions. This is thanks to the combined power between bookkeeping and accounting services.
- Bookkeeping is the foundational essence of good accounting. Bookkeeping is the work of recording financial transactions that happen day-to-day. Bookkeepers create a direct record of all the purchases a business makes, and the sales transactions it earns.
- Accounting takes the information documented by bookkeepers and gives it meaning. Day-to-day, the books are likely balanced and everything looks great. But what could be better? What efficiencies could be achieved? And what investments or growth decisions will keep the company growing strong?
Many full-service accountants perform bookkeeping duties as well, while other firms may have experts working in either specialty. At Delta Wealth Advisors, we unify expertise in Certified Public Accounting with financial services like planning, real estate investment, tax minimization strategies, investment strategies, and more. It’s our mission to serve as a one-stop resource for business owners to manage their business and personal finances with one trusted vendor who has a clear perspective of the entire picture and can give advice accordingly.
Whatever the ideal approach for you, it’s important to understand how these services relate to each other so you can ask the right questions of potential service providers.
What are the Types of Accounting Services?
There are four main types of accounting services. Each of these types of accountants carries out the five main accounting activities in a different sector or area of specialty:
- Public Accounting: This is the most comprehensive type of accounting for organizations and individuals, including analysis of financials, identifying errors, payroll, bookkeeping, and tax preparation.
- Government Accounting: This type of accounting ensures the transactions, spending, and revenue generation of government entities are in compliance with the law. Government accountants also manage government assets and inform the budget.
- Managing to Account: These accountants take a business’ financial data and apply it to help with cost management, asset management, and employee performance evaluation.
- Internal Auditing: Overall, auditors look for areas of waste, error, fraud, and mismanagement. This can include evaluating compliance with tax law or employment law. Auditors may specialize in certain areas like compliance, technology, or taxes, and can be hired by a business to proactively detect and resolve risks.
24% of all auditors and accountants in the US work doing accounting and bookkeeping, payroll, and tax preparation for their employers and/or clients. Only 8% of accountants are government accountants, and only 7% of the accounting workforce are in management or leadership positions. Another 7% are self-employed freelance accountants.
What Services do Accounting Firms Provide?
Within the four main types of accounting functions, there are many different accounting and bookkeeping services a firm might provide. Some of these services, like bookkeeping, accounts payable/receivable, and payroll are the foundation of more advanced accounting services like tax accounting, forensic accounting, or strategic planning. One of the reasons it’s great to work with an accounting firm is when it means you can access all the functions on this accounting services list under one roof!
- Bookkeeping: Bookkeeping is the practice of monitoring and documenting the payments made and received by the business or organization, as well as other financial accounts.
- Accounts Payable: Accounting firms support accounts payable by ensuring payments are not duplicated, coming up with solutions to manage expenditures, and by managing outgoing financial transactions and the associated documents.
- Accounts Receivable: On the accounts receivable side, the support of an accounting firm helps businesses improve the rate of collections, reduce the time frame it takes to receive a payment, and carry out more efficient invoicing.
- Payroll Processing: This accounting service example not only ensures employees are paid on time and that their benefits are managed, but also that the employer is withholding and paying the appropriate taxes year-round. Accountants also support the maintenance and documentation of payroll law compliance.
- Bank Reconciliation: A bank reconciliation is an accounting service that protects businesses from fraud and error. This is the process of making sure the transactions documented by the business match with the transactions on the bank statement. Any missing transactions or extra transactions are then examined and corrected appropriately.
- Tax Accounting: Tax accounting is an example of accounting services that impact the business year-round. A tax accountant will give advice about how to reduce the business’ tax liability and address any errors or concerns. Working with an accounting firm year-round empowers you to avoid surprises and stress during business tax season.
- Forensic Accounting: Forensic accountants specialize in locating missing funds. They often work closely with law enforcement to achieve this goal.
- Financial Controller Services: Financial controller services include preparing the budget, payroll, tax compliance, and other accounting functions. Some organizations that have a firm handling a majority of the accounting may also ask the firm to perform some of these controller services. Whether an internal employee or external vendor, the financial controller also prepares the reports and presents findings and insights to the Chief Financial Officer to guide decision-making.
- Accounting Audit: An accounting firm can also provide an audit to validate the past record-keeping and ensure accuracy, as well as provide leadership with a transparent look at the current financial status of the business.
These accounting services examples clearly demonstrate how an accounting firm is able to take responsibility for the full financial wellness of a business. From recording and managing the day-to-day transactions, to stepping in when there’s an error or inconsistency, accounting and bookkeeping firms can be trusted to share solutions and new efficiencies that improve operations.
What Kind of Accountant Does a Business Need?
Businesses may need either an internally-facing or externally-facing accountant. Internally-facing accountants provide insights, strategy, and reporting to business leaders like owners, executives, the board of directors, and company shareholders. External accountants, by contrast, work with vendors, compliance entities, lenders, and customers to manage and analyze the financials.
Another competitive edge gained by working with a full-service accounting firm is getting access to these specialties when you need them. For growing businesses, this approach enables cost and time savings. When the average expense for one in-house certified accountant is over $75,000 in salary alone, small businesses may not want to make a full-time hire, but still need access to the insights and experience this investment would provide.
Not every company needs every type of accountant at all times, but the bigger you grow, the more there is a need to understand and consider the financials while making business decisions. The unique needs and questions of your business informs not just whether you need an internal or external accountant (or both), but also the types of accounting activities they need to perform. This is when you will question if you need a certified or otherwise credentialed accountant.
- Certified Public Accountant: A Certified Public Accountant (CPA) in the US has a license to provide any and all accounting services to the general public. Services that a CPA can provide include certified audits and financial statements, and reporting to the Securities and Exchange Commission (SEC). In addition to the unique and rigorous requirements each state sets for these professionals, CPAs must also pass a four-part exam to achieve the certification and go through yearly continuing education to maintain it.
- Chartered Accountant: A Chartered Accountant (CA) is a worldwide professional credential that signals an accountant is qualified to handle specialty duties like auditing. Just like with the Certified Public Accountant (CPA) credential, earning this certification usually takes a minimum of five years combining work experience and financial education.
- Non-Certified Accountant: A non-certified accountant is one who has not met the educational or work requirements to become a certified or chartered accountant. These individuals are limited in the kinds of financial statements and reporting they can review and prepare. Non-certified accountants often work as highly-qualified bookkeepers, and may also support tax preparation, accounts payable, accounts receivable, and payroll needs.
One element that is transforming the lives of all three of these types of professionals is technology and software. According to Sage, 67% of accountants say cloud technology is improving their service offerings, and 66% would invest in artificial intelligence to automate time-consuming, repetitive tasks. In addition to seeking a qualified, well-rounded accountant, a business also needs one that is leveraging all the cloud solutions available today to achieve efficiencies.
Tools like QuickBooks, Sage50, Cloud Accounting, and Xero are some of the most popular options that allow accounting firms to automate the basics and spend time focusing on the elements of accounting that require human insight, experience, and empathy.
Get Access to Full Accounting Services with Delta Wealth Advisors
Delta Wealth Advisors is a team of experienced accountants, tax professionals, and financial advisors that provides businesses with the opportunity to align every aspect of their business’s financials with goals for the future. We have the time, expertise, and passion to dive in and help address every question and concern related to business finances. From daily bookkeeping and transaction management to high-level annual reporting, compliance, budgeting, and strategy, we combine our decades of mutual experience with cutting-edge tech solutions to deliver outstanding peace-of-mind to our clients.
Whether your concerns are for the business or for where your personal finances intersect with the equation, we can help. Contact Delta Wealth Advisors today to get the accounting and financial support you need to grow, thrive, and cultivate your dreams.