By the numbers
The accounting and bookkeeping departments in most companies are relied upon to keep those companies on track and within the State and Federal Tax reporting and Tax compliant practices, laws and guidelines. These highly skilled employees must at all times have their fingers on the pulse of their respective company’s financial health and must, on a moment’s notice, be able to report the particular company’s performance to their employers as well as any State or Federal regulatory agency in the case of an audit, claim(s) against the company, or other such inquiry.
In fact, this area of a business’s operations is so crucial that some small businesses which can ill-afford to man an accounting and/or bookkeeping department outsource this kind of work at costs that don’t bust their budgets. The work done by these departments may very well be most important to everybody working in the company except, maybe, for Marketing and Sales.
Financial wellness
All the salaries and taxes earned and paid by every employee every pay period have to be recorded, and the payroll department has to ensure that appropriate federal, state and local taxes are being deducted. The pay stub attached to every employee’s paycheck records these taxes; and they usually include Income Tax, Social Security Taxes, Medicare Taxes and Self-Employment Taxes that have to be paid to federal and state governments. Other deductions are categorized as personal such as retirement, vacation, sick pay or medical benefits. It’s a critical function and, as mentioned above, some companies have their own payroll departments while others outsource it to specialists.
The accounting department receives and records any payments or cash received from customers or clients of the business or entity; and the accounting department has to make sure that the money is sourced accurately and deposited into the appropriate accounts. They also manage where the money goes; how much of it is kept on-hand for areas such as payroll, and how much of it goes out to pay what the company owes its banks and vendors as well as other obligations. Some of the revenue is also earmarked for investments but this particular area of expertise may not necessarily be an area that the accounting and bookkeeping departments will undertake.
Income & Expense
The flip side of receivables in a business is the payables, or cash disbursements and, as would be expected, a company writes quite a number of checks during the course of a year to pay for purchases, supplies, salaries, taxes, loans and other products and services it needs to operate. The accounting department prepares all these checks and records who they were disbursed to, how much and for what.
Accounting departments also keep track of purchase orders placed for inventory such as, products that will be sold to customers or clients. They also keep track of assets like the business’s property and equipment. This can include the office building, furniture, computers, and even the smallest items such as pencils and pens.
