Let me start by saying that I am fully aware that finding information about the “real” way that accounting should work in business is nearly impossible. From the misinformation, partial information, half truths, and whole lies… it’s hard to trust that any of us know what we’re talking about! I get it! As a CPA, I’m required to follow a rigorous code of professional conduct which requires I act with integrity, objectivity, due care, competence, and more. I’m saying that to say… My accounting advice, thoughts, actions, and everything else are given with my responsibility as a CPA in mind. Now… Let’s move on!
Want to know a secret?
Ok, well two secrets? 1) Running a successful business is way more about mindset than anything else; 2) There are a lot of moving pieces to most things in business. For solopreneurs and a lot of small business owners, understanding the levels and pieces are extremely important for business success.
When it comes to accounting specifically, the same rules apply. There are a lot of moving pieces. At Right Choice, we like to call this The Accounting Puzzle. Similarly to those fun puzzles that we are used to, The Accounting Puzzle combines the different pieces (or functioning levels) of accounting to create a whole well-rounded function (or well-oiled machine). Some of the most common pieces to the Accounting Puzzle for most businesses include: the “Bookkeeping” level, the “Accounting” Level, and the “Leadership” level.
We all know by now (or should know) that this is one of the most important functions in the financial management of a strong business. Generally speaking, bookkeeping includes categorizing, organizing, and reconciling all of the financial transactions to ensure accurate reporting. Everything in accounting is based on accurate bookkeeping. EVERYTHING!
We like to think of accounting as the bridge between bookkeeping and management level functions. The accountant level roles on your team are primarily responsible for reviewing the bookkeeping and financial records, and doing all of the necessary tasks to “set the stage” for the high level tasks to begin. This is where most of the work is done!
This is where the big picture strategy, insights, and decision making is handled. This is where we ensure that the accounting process and outcomes are in line with the mission, vision, and goals of the organization. In order for the high level function to thrive, the bookkeeping and accounting functions must be solid!
If we want to go a little deeper, the way that we think about the levels of a successful accounting function is the same way that we think about the levels of a successful business overall. The building blocks of most successful functions include: Admin (i.e. Bookkeeping), Review (i.e. Accounting), & Strategy (i.e. Leadership). If you are running a successful business, then you may notice these building blocks coming up in more than just the accounting puzzle of your business. Think about it. In what other departments do you see admin → review → strategy? Even the tax process follows these building blocks.
Creating Plan To Decrease Tax Liability
This is the perfect time to add – If you’re not creating and following tax strategies to benefit you year-round, then you’re not doing yourself any favors. Although there is a tax “filing” season, tax season is year round! There should always be considerations of current tax status, the effect of decisions on taxes, and how to strategize and save on taxes.
After reading this, I recommend that you take a moment to see if your puzzle pieces are fitting together. Have you been forcing pieces that don’t fit? Are you missing pieces? Remember, we all have the puzzle board in our possession – it’s just a matter of finding and matching the right pieces on the board.
Right Choice Accounting Solutions is proudly a black owned, CPA led outsourced accounting and tax firm. Right Choice offers a one-stop shop accounting and tax solution that covers high level strategy, accounting insights & analysis, financial statement preparation, tax planning and preparation, basic bookkeeping, and much more. Schedule your FREE intro call TODAY to learn more about what makes us the Right Choice for your accounting and tax needs.
Keywords: Accounting, Tax, Black Owned, Bookkeeping, Certified Public Accountant, CPA, Tax Preparer, Tax Liability, Strategy, Leadership, Executive