Payroll and Bookkeeping

Financial Data: What’s the Difference Between Payroll and Bookkeeping?

Most small firm owners do not know the difference between payroll and bookkeeping. This is why they have dedicated employees that fill various positions inside the company. A small business accountant is responsible for all accounting, payroll, and bookkeeping responsibilities.

And because of this, you may assume that this is how things are supposed to operate. Although at some institutions, particularly large corporations with a large staff base, it is not the case.

Sure, the SlotoCash Casino accountant, for instance, can do all these, but they have their distinct differences from bookkeepers and payroll clerks that we shall cover in this piece. So, the next time you talk to an accountant and they tell you they do one and not the other, you will fully grasp what they mean.

Definitions

Let’s cover a few definitions here to make sure we’re all on the same page.

Payroll

Payroll deals with everything to do with employee salaries. By entering data into the payroll system, payroll clerks complete documentation for new hires, and record sick days, other types of leave, and punctuality data. They also gather and issue timesheets and handle paychecks.

Payroll accountants use computer software like spreadsheets, databases, and payroll management systems to perform their duties.

Bookkeeping

Bookkeeping entails the day-to-day financial duties that involve financial transactions and all the financial data related to the company. A bookkeeper handles the financial paperwork like invoices, financial statements, and financial reports.

Accounting

Accounting professionals’ duties typically vary depending on the size of the company. For instance, a giant corporation accountant clerk may be only in charge of a specific financial sector like accounting tax, where they focus on everything tax-related like tax returns, compensations, and deductibles.

While in small businesses, they may be tasked with overseeing everything finance, including payroll and bookkeeping.

What is Payroll?

Payroll is described as a list of employees and the allocated salary they are to get each month. Allowances like health insurance, housing, and other stipends the company offers its employees are vital for payroll.

Payroll tasks

Professionals can achieve the payroll process in three ways: payroll accounting, software, and manual payroll processing. Small companies can outsource payroll services or install automated payroll software from established financial institutions.

Hiring such services will help your available staff to focus on other business matters that need their undivided attention.

Here is a list of all the payroll tasks:

  • Gathering and organizing financial data about employees to process payments.
  • Payday payroll computation and employee distribution.
  • Processing employee financial records, including pay and salary records.
  • Processing bonuses, deductions, withheld payroll tax payments, etc.
  • Processing award rates for each employee.

What You Need to Run Payroll

For payroll professionals to do their job efficiently, they need to have the following things in check. These are usually specific and confidential financial information for each employee.

  • Accurate employee details: name, bank account details, accounts payable, address, etc.
  • The agreed contractual wages.
  • Time off or leave days.
  • Hours worked.
  • Overtime payment.
  • Additional wage constraints like insurance, Flexi-pay, child support, and salary sacrifice.

What Does a Bookkeeper Do?

The difference between payroll and bookkeeping is that a bookkeeper is responsible for receiving, analyzing, distributing, and safekeeping all company financial records. They specialize in data entry of all these records within the dedicated secured company portal that stores all the financial reports and statements.

Bookkeeper Tasks

Since bookkeeping is generally the straightforward data entry of financial records, a basic ICB certificate in bookkeeping and accounting may suffice. Luckily nowadays, with numerous bookkeeping software, a bookkeeper can achieve so much in a short time to run all the tasks assigned to them.

A bookkeeper does the following:

  • Processes clients’ invoices of services sold.
  • Processes supplier’s payments.
  • Monitoring money flow in and out of the company.
  • Ensures timely payments of company bills.
  • Ensures the company’s financial statements and records are up-to-date.

What Does an Accountant Do?

Accountants are usually highly specialized professionals with extra educational distinctions and training in managing and overseeing all accounting tasks. As we mentioned earlier, an accountant may be specialized in one area or not, depending on the company size.

The types of accounting are financial data, cost, managerial, government, tax, non-profit, and auditing.

Accountant Tasks

Accountants need more credentials, especially if they handle the company’s financial reports that undergo external assessments. For instance, a balance sheet can only be processed by a certified accountant.

Note that the accounting process run by an accountant hired by a small business owner will significantly differ from one employed by a big company. Regardless, here are the general tasks that accountants carry out in business:

  • Analyze the profit and loss statements.
  • Investigate cash flow issues.
  • Ensure that taxes are filed accurately, on schedule, and that all requirements are met.
  • Take care of outstanding invoices.
  • Give financial guidance.
  • Audit your business.
  • Offer assistance with long-term budgeting and growth strategies.

Conclusion

Your company’s financial health, big, small, or medium, is essential. And so, finding a distinction between payroll, bookkeeping, and accounting will help you streamline your business’s financial health. The three are interconnected, and a mistake in any of them can lead to costly consequences in the future. Therefore, it is best to hire experts in each field to avoid any mishaps.

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