Imagine you just started your own healthcare practice and have hired a team to help. But you realize that you don’t have anyone to handle the financial aspect, so you start to compare accounting vs. bookkeeping.
Both can be essential to any business, but they do have their differences. Consider how they’re similar and different so that you can hire the right person to manage your business finances.
Keep reading to learn more.
What Bookkeeping Is
Bookkeeping involves tracking financial records for a business. A bookkeeper can use documents, such as receipts and invoices, to accurately track a business’s revenue and expenses.
You can use different tools for bookkeeping, such as accounting software, a spreadsheet, or even a pen and paper. As long as a tool can list out your transactions, you can use it for healthcare bookkeeping.
Bookkeeping has two options for recording transactions. If you have a small business, you can use single-entry bookkeeping, where you write the transaction once. However, double-entry bookkeeping creates a debit and credit for each transaction.
What Bookkeepers Do
Bookkeepers are the people that track the financial records for your business. Almost anyone can be a bookkeeper, and you can handle it until you can hire someone else for the job.
Depending on your accounting system, you can record transactions when they occur, which is accrual accounting. This can be helpful for a healthcare business since you may not receive the money until later.
On the other hand, you can use cash accounting, which involves recording expenses when you receive money or pay bills. Either way, your bookkeeper can track financial records based on your accounting method of choice.
When You Need a Bookkeeper
You may need bookkeeping services if you have a lot of transactions to process and record. If you have a very small healthcare business, you may be able to track everything yourself.
However, a bookkeeper can help track patient payments and supply orders for your clinic. Then, you can focus on treating patients and running your business instead of balancing the books.
Even if you use a tool like www.quickpayportal.com, a bookkeeper can save you a lot of time. Hiring someone may seem expensive, but it isn’t as expensive as hiring an accountant.
What Accounting Is
Accounting can involve bookkeeping, and the two often work together. However, accounting goes further than bookkeeping in that accounting will review and analyze financial statements.
After analysis, you can create a financial report detailing the different expenses and revenue streams. You can use the report to make decisions regarding future expenses and pricing.
While bookkeeping is an essential part of your business, healthcare accounting can help you ensure your business remains profitable. Then, you can treat more people and enjoy working for yourself as a healthcare professional.
What Accountants Do
Accountants take the work of bookkeepers and use the information to help the business grow. Some accountants may also do the bookkeeping, especially for a small business. On the other hand, bookkeepers can do some basic accounting work.
However, bookkeepers can’t go as in-depth as accountants with financial reports. While a bookkeeper can show how much a business earns and spends, an accountant can figure out if that’s good or if you need to make changes.
An accountant can look to the future to help you optimize your expenses and profits. That way, you can continue to grow your business without taking on unnecessary costs.
When You Need an Accountant
You need an accountant if you want to reduce costs for your healthcare business. An accountant can also help if you need to present balance sheets and cash flow to the public or other owners and investors.
Healthcare accounting can also help you figure out where you can increase prices or where you may need to lower costs. Then, you can use that information when adjusting your services or ordering medical supplies.
While a bookkeeper can track your financial information, accounting services can help you meet your financial goals. You won’t have to worry about making the same financial mistakes in the future.
How to Choose Between Accounting and Bookkeeping
If you can’t afford to hire a huge team for your healthcare business, you can consider hiring an accountant or a bookkeeper.
On the one hand, a bookkeeper can be more affordable because they don’t have any certification like an accountant. A bookkeeper can also be helpful if you have a lot of transactions that you need to record. But you can also do the bookkeeping if you’re good at tracking transactions.
However, an accountant can also do basic bookkeeping as well as more advanced analysis. Accountants can also help direct your business so that you can remain financially viable. While you may need to pay more for healthcare accounting, it covers more.
Consider your needs and budget when deciding between accounting vs. bookkeeping. You can always hire another person later when you have the money.
Do You Need Both?
You don’t need to choose between accounting or bookkeeping. Depending on your business, you may need both to help track and analyze your finances to grow your business.
Your business may need both a bookkeeper and an accountant if:
- You have a lot of transactions
- You want to focus on growing your business
- Your business hasn’t been profitable
- You’re too busy to do either task
- You can afford it
While some businesses may only need help with accounting or bookkeeping, having both can be useful. Not only can you make sure your financial records are complete, but you can use them to make future spending decisions.
That way, you can focus on growing your practice and taking on more patients. You won’t have to worry about not having time to work on your books.
Reviewing Accounting vs. Bookkeeping
At some point, you will need to compare accounting vs. bookkeeping to decide which is better for your business. However, you may decide that you need both functions as your healthcare business grows.
Whatever you choose, make sure you have the right tools and choose the right person or people to work with you. That way, you can trust your financial records will be accurate.
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