Accounting is a mystery to most people who haven’t studied it. It’s complex and involves a ton of math, so people usually give up trying to understand it at the first sign of an unknown. As an accountant, I think it’s important for the general public to have a knowledge of some basic parts of accounting, so here’s a list of some things everyone should know about accounting.
1. Accountants are not financial planners.
Many people assume accountants are financial planners. While some people may be certified for both, others are strictly one or the other. Accountants simply make sure the amount of money you spend and the amount of money you make adds up to the total amount of money you have (to put it briefly). Financial planners typically guide clients when choosing investment opportunities, which many accountants do not dive into. For one, they may not be legally qualified to give these opinions. For another, they may not be well-versed in any of these subjects, so it is important that you hire a financial planner alongside an accountant if you need help investing.
2. Businesses and people benefit from them.
People usually assume that businesses (or the elite rich) are the only clients for accountants, but it isn’t true. The average person can benefit from having an accountant keep track of their balances. Many accountants complete bookkeeping tasks for normal people (i.e. balancing a checkbook, looking over bank statements, etc.), as well as maintaining important information for tax purposes. This can be crucial if you are self-employed, you had major life changes this year, or you recently bought your own house.
3. A good accountant does not rely on loopholes.
Failing to pay your proper amount in taxes can lead to fines or even jail time. A good accountant will make sure you’re paying the amount you actually owe, and will not try to jump through pseudo-legal loopholes. While they may work in some circumstances, people often get burned by claiming tax deductions they do not actually deserve. A legitimate accountant will claim everything you are owed and not wade into territory that will have the IRS breathing down your neck.
4. Accountants perform many tasks.
It’s tempting to assume that accountants only balance checkbooks and correlate them with bank statements, but in reality, they do so much more. Some functions they perform are:
- Manage payroll, including processing payments
- Prepare budgets
- Resolve discrepancies
- Works with internal and external auditors to make sure the books are accurate
There are tons more tasks that each accountant does, and depending on their clientele, some may perform different ones than others. However, accounting is a complex field that involves working with many people.
Even if you’ve never had an accountant and have no need for one, I still believe it is important to understand what accountants do. The field is not often explained in-depth to the average person, so hopefully you can take these facts and dive in more to find out what exactly an accountant is and does.