Discovering the 4 Types of Accounting

Having an efficient accounting system is the key. Whether you are a small business or a large business, overlooking accounting can result in stagnancy and eventually business closure.

There are several types of accounting systems that any business would need to streamline and grow finances. While financial accounting is most important, finding it locally could be a huge challenge. That’s why accounting outsourcing services are in high demand. Hiring a dedicated, highly skilled Bookkeeper can solve many accounting problems.

Let us discuss the 4 major types of accounting.

  • Financial accounting

Financial accounting in the simplest sense is the way of recording and streamlining finances within a business. The cumulative result of all the financial transactions and statements are The results of all financial transactions that occur during an accounting period are reported in the balance sheets and income sheets and cash in and out sheet. Mostly in small businesses these days this work is done by Bookkeepers who provide accounting outsourcing services and bookkeeping services. The financial statements are subject to auditing and generally external firm audits annually.  Financial accounting involves various sets of accounting standards and principles which are developed over a period of time. Selecting the financial accounting standard used by professional Bookkeepers depends upon the requirements of the company.

  • Managerial accounting

In a way managerial accounting involves collection of data from the same source as the financial accounting but then bifurcates into a more streamlined role. The information utilised for the managerial accounting involves the generation of reports either monthly or quarterly reports that a business management team can use to make decisions about the flow of business and future operations. Managerial accounting is multifaceted accounting that encompasses budget design for the business and forecasting using various financial analysis tools. Managerial accounting outsourcing has grown in recent years. Efficient management accounting is one of the advisory roles of bookkeepers.

  • Cost accounting

It is considered to be part of managerial accounting. Cost accounting is most commonly used by the manufacturer and industrial experts in the manufacturing industry. It directly involves utilising abundant resources and cost management. Cost accounting is effective in assessing the business’s operations by a robust assessment, recording and analysis of cost of manufacturing. Cost accounting also involves dealing with a company’s fixed and variable costs and how it can be divided and managed with the help of dedicated accounting tools.

  • Tax accounting

One of the efficient Bookkeeping services involves tax accounting. Unlike traditional accounting services that involve catering to the overall financial accounting, reporting and ensuring better finance management, tax accounting is totally dedicated to taking care of client’s taxes. It works with the tax laws and internal revenue code which businesses follow while filing their tax return documents. Professional Bookkeepers are excellent tax accountants, they ensure their clients follow government taxation laws, and prevent them from paying any extra amount as penalty.

Businesses can outsource accounting services to meet their tax planning and effective tax accounting. Bookkeepers offer tax planning advisory services to their clients, and help them save money during filing of the tax returns. They are responsible for developing efficient tax planning to be followed throughout the year and can be revised at the end of each financial year. The plannings help in meeting all financial targets for the year and future and prevent them from attracting the threat of paying extra money via tax.

Checkout here: What are the different branches or types of accounting?