What Is Accounting? 

Accounting is an organizational approach to help businesses understand their financial information and business records.

It's easy to think of accounting as a person who takes in raw financial information, records all of your business projections, taxes, transactions, etc.

They will then provide you with a report about the financial state of your business that is easy to understand and helps determine the success of your business. 

Accounting can help businesses understand their cash flow, whether or not they are making a profit, which parts of the business are actually pulling income and the current value of the company's liabilities and assets are.

Accounting vs Bookkeeping

Although bookkeeping and accounting overlap in many ways the simplest way to explain the difference is: 

Accounting: Exceptionally utilizes the financial data through tax planning, strategy, and analysis. 



Bookkeeping: How one categorizes or records financial transactions. 

Accounting Cycle

An accounting cycle is a lingo that accountants call the process made to take in raw financial data and provide consistent and accurate financial reports.

Bookkeeping is the first step in this accounting cycle. 

This cycle starts the moment that your business has a transaction - if it involves your business's money it must go into your company's ledger. Bookkeeping involves recording business transactions. 

Major Steps For Accounting Cycle:

1. Record and Analyze transactions (look over bank statements, invoices, etc.)
2. According to the rules of double-entry accounting, post transactions to the ledger 
3. Listing all of the business's accounts and discovering their balances through an unadjusted trial balance. 
4. At the end of the period, adjusting entries will be prepared. 
5. Adjusted trial balance prepared
6. Financial statements prepared

Accounting rules and processes are mostly automated by accounting software. So on to learn about an important part of accounting; financial statements.

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Colorado's trusted Bookkeeper & Accountant.

Contact Boyd Services to schedule your free consultation. We’ll take the stress of accounting & bookkeeping off your hands and mind while providing you with a real and compassionate person to help you succeed. Don't deal with the pressure of dealing with business taxes alone.

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Financial Statements

The reports that summarize how your business is doing financially are called financial statements.



The 3 Main Types of Financial Statements

• balance sheet
• income statement
• cash flow statement

These statements will help you understand where your money is and how it got there. 

For example, if you are a freelance fitness instructor who bills clients for training. These financial statements can help you understand what months are the most profitable and how much money is spent on tools and supplies. You will also be able to determine the business's total value. 

Financial statements can be done by a bookkeeper, to avoid headaches and miscalculations.

The Different Types of Accounting

• Financial accounting
• Managerial accounting
• Tax accounting
• Cost accounting
• Credit accounting

Contact us if you have any questions about what accounting you need, free consultations available! 

Why Accounting Matters For Your Small Business

-Helps plan for growth

Properly assess the full development of your business through financial statements.

-Get paid with accounting

Balance sheets track how effectively you’re business is collecting payment. Helping you create processes to provide better follow-up with unpaid clients or harder payment deadlines, to ensure you get the money you've earned! 

- Accounting and securing a loan

If you are needing to get a loan for your small business accurate financial statements and cash flow projections are essential, and can only be done with an accounting system in place.

- Get investors or sell your business with accounting

Even if you are not looking for investors or potential buyers, in the future, you may need accounting records to prove your business is on track for growth and profitable. 

- Stay out of jail & annoying fines with accounting

Reduce your risk of breaking tax laws, avoid possible jail time and fines with solid accounting. Accurate financial records are imperative and having an accountant filling your taxes ensures that it's done accurately and on time.

-Don't pay a penny extra to the IRS

Accurate financial records produced through accurate accounting helps you predict your income and ensure that you are not paying a penny more, than you need to, to the IRS.

The Job of an Accountant

Accounting is important for businesses because it saves you from the unknown and brings you to a clear path of success. A talented accountant could save you money and will definitely save you time!



Accountants also provide businesses with insight and knowledge that you can't get on the internet. Learn about tax deductions that could save you a lot, see where you could be cutting costs, and even about tax rules you may have not known you were breaking. Either way, you'll be sure to get a lot from your experience with an accountant. 

All businesses can benefit from having an accountant. So look no further than Colorado's trusted accountants at Boyd Group Services.