An accountant or bookkeeper is a person who keeps track of the daily activities of business and translates these activities into reports that tell whether the business is being profitable or not.
It used to be that this is all done by hand, but of course it is mostly done by computer now. When transactions occur, the transactions are recorded digitally by means of a cash register, skinny invoices or similar such devices. The transactions can then be captured by the computer and reports generated through this process.
It is very important for business owner to know if the activities that transpire during a business day are bringing in a profit or a loss. If the business activities show a loss over a period of time, the business owner will have to alter what is being done or the business will fail.
An accountant keeps track not only of profits and expenses, but also keeps a running total of the assets and liabilities. Assets are things like property, fixtures, vehicles, and the items that are owned. Liabilities are what is owed by the company and by keeping these two categories it is possible to determine the value of a business.
The accountant or certified bookkeeper is able to keep track of the transactions of a business and advise the business owner of what steps might be taken in order to improve business operations. For example, if a series of expenses keep occurring there might be some steps taken in order to reduce or eliminate those expenses.
The business owner usually does not have time to keep track of all the little incidental transactions and categories that are necessary to know how the business is running. This is why a good accountant is so valuable to a business owner. The accounting process needs to be kept and governed by the accountant, so that you can concentrate on your customers in the day to day activities of running the business.
Another reason for having a good accountant is that once tax time comes, the accountant will have all the necessary information in order to prepare the correct income taxes. The accountant will also be able to handle payroll taxes if the business has employees. This accounts for the withholding of the employees’ social security and income taxes from their salaries.
Without an expert accountant most businesses would have a much more difficult task of keeping track of the health of the business as well as keeping track of the taxes. Some businesses can hire an in-house accountant, and others will hire a freelance professional for the accounting work.