Debunking common myths in the accounting industry
It’s just about a week until Halloween, so we’re continuing with the theme of things to watch out for in business. This week, we’re looking at accounting and debunking a few myths that people have about it.
Accountants and Accounting Only Deal with Taxes
While taxes are an important part of accounting, accountants serve a far larger purpose and provide a wide range of financial services, including financial analysis, budgeting, and advising on business strategies. All of these help business owners and managers understand how the company is operating and can help with making decisions to improve the business.
Accounting Is Just Math
While math is a fundamental skill in accounting, the reality is that accounting is more about knowing the rules, regulations, and laws. This becomes very important when deciding whether to use contractors or employees, selling products or services over state lines, looking into entering new industries or territories, and many other issues. Modern accounting also relies heavily on software and technology for data analysis, automation, and financial reporting. Finally, communication and problem-solving skills are equally important.
All Accountants Are CPAs
Not all accountants are Certified Public Accountants. CPA is a specialized designation that requires passing a rigorous exam and fulfilling specific education and experience requirements. Many accountants have other certifications or degrees, but practical experience and a current knowledge of the rules and regulations are equally valuable. CPAs definitely have their purpose, but that leads to our next myth...
Only CPAs Can Do Accounting
Many business owners believe that all accounting must be done by a CPA; however, most of the day to day financial work like bank reconciliations, tracking expenses and revenue, payroll, sales tax, really requires a bookkeeper or lower level accountant. CPAs charge far more for their time than bookkeepers, so it’s best to reserve them for more detailed accounting issues such as long term strategy or dealing with investors.
Accountants Are All the Same
Accountants often specialize in various practice areas (e.g., tax, audit, forensic accounting, management accounting, public, and others) as well as industries. When operating in various industries (e.g., health care, government contracting, construction, real estate, retail sales, etc.,) it’s also important to work with accountants that have relevant industry experience as there are details and steps that must be followed for accurate financial reporting. This is why it's important to choose an accountant with expertise that aligns with your specific needs.
Software is a Substitute for Professional Accountants
While software has simplified the process of bookkeeping and accounting, it falls short on explaining accounting rules and business regulations. Further, unless used properly, the software won’t explain what is really happening with the business. Accountants help with accurately tracking the financial aspects of the company, ensuring compliance with regulations, forecasting, and tax planning. This ultimately results in saving money, time, and preventing costly mistakes.
Being a business owner and manager is difficult and time-consuming. Being able to rely on an accountant or accounting team that understands the needs and targets of the business can make a huge difference in achieving your company’s goals. Give Brightleaf a call to see if we’re the right fit for your business and let us help you reach your goals!
- John Thrush