Bookkeeping and payroll are essentially two separate functions which can be combined within a single service. More and more small business owners choose to outsource these functions to a professional provider of bookkeeping services in San Diego, preferably one who also offers payroll processing and tax preparation.
And while the terms are often used interchangeably, you need to know what the differences between these functions are so you can make informed decisions on who handles your finances, whether it’s individuals or firms, and maximize your savings of time and money. So how exactly is bookkeeping different from payroll?
Can a bookkeeper do payroll?
Accounting, bookkeeping and payroll are related processes. All three are essential to businesses, but the way in which they support businesses differs: each of these processes take place in different stages of the financial cycle.
Bookkeeping is essential to accounting as it gathers and stores financial records accountants use to analyze, verify and report results. Payroll is part of the bookkeeping process. Although there are other methods to run payroll, bookkeepers can do payroll, in addition to other tasks which cover a broader range of financial transactions.
Hiring a professional bookkeeper might be a smart investment of your resources: they can carry out your bookkeeping process in an accurate and timely manner, help you navigate complex California laws and overcome challenges that come with being an employer in California, as well as safeguard you against payroll mistakes.
Is bookkeeping the same as payroll?
Running payroll is one aspect of the bookkeeping process. A bookkeeper may do payroll by hand or use automated payroll software.
The process of running payroll requires access to the financial records of employees such as salaries, wages and bonuses, withheld taxes and deductions, etc. Payroll can also refer to the action of calculating and distributing paychecks on payday or the money that the company owes and pays its employees.
To run payroll properly, whether you choose to do it by yourself or have a professional do it on your behalf, you will need to put together all the information correctly, triple-check the data and submit it in a timely manner:
- completed W-4 Forms from your employees
- information on hours worked for hourly workers
- information on time off
- salaries or wages
- overtime pay information
- fringe benefits
Set deadlines to ensure a smooth payroll process. Missing deadlines is among the leading causes of payroll errors as it may lead to rushing the payroll process and letting payroll mistakes go undetected.
What does a bookkeeper do on a daily basis?
Bookkeeping is about performing and keeping records on common day-to-day financial transactions of a business, including:
- paying suppliers for their products and services
- billing clients for goods or services
- recording invoices and receipts from customers
- processing employees’ payroll
- keeping track of accounts receivable
- keeping track of depreciation
- issuing financial reports
Bookkeepers use specialized software which helps make the process faster and more efficient while minimizing the risk of error or using inaccurate or outdated information.
Set up your bookkeeping service in San Diego now
Running a business is a non-stop engagement, which is exactly why you need to save time and energy any chance you get. We give you the opportunity to do that. At David York’s Tax Service, we can help you manage your paperwork and handle your bookkeeping and your payroll, as well as your corporate and individual taxes.
Focus on keeping your business up and running and we’ll focus on ensuring the paperwork and technicalities check out. We will work diligently to limit the risk of mistakes and the complications and costs these could lead to and you will finally have some time to spend a relaxing day at Moonlight State Beach. Contact us today!