Are these common accountancy myths stopping you from receiving good financial advice?

Overview: 7 Common misconceptions about accounting that might be stopping you from getting the appropriate financial guidance you need.

Like most professions, there are assumptions and misconceptions about a career in accountancy. This includes what type of people accountants are and what the job involves. However, many of these misconceptions are just that — misconceptions. They could also be misleading.

If one of these misconceptions is stopping you from receiving good financial guidance for your business, you might want to keep reading. Because free generic accounting advice isn’t always better than that of a qualified individual — to start off this myth-busting conversation. 

Sure, each experience may not be the same for your situation, and some exemptions and limits affect each person differently, but you will still save time and money in the long run by consulting with an accountant.

Accountancy myth #1: Bookkeeping and accounting are basically the same thing.

Wrong. Accounting is not the same as bookkeeping, and you should deal with an expert who knows how to do both. The actual definition of accounting is sometimes confused with bookkeeping.

• Bookkeeping is the recording of revenue and expenses for a business. It’s an ancient skill that goes back to the beginning of human civilization. Bookkeeping is a critical element of accounting, but not the entire foundation.

• Accounting goes beyond just keeping accurate books. Accounting also involves analyzing the past financial records of your company and using this data to make forecasts for your future.

  • Essentially, accounting involves categorizing and understanding your bookkeeping and predicting what your books will look like down the line.

Part of your accounting practice should include analyzing your records as well as conducting regular business planning.

Accountancy myth #2: Payroll software with payroll calculations and tax payments are all I need for payroll.

Well, you need more than software.  Accountants help you to comply with the Department of Labor, Internal Revenue, and State regulations regarding employees.  There’s more to payroll than printing a paycheck. In what ways?

• Examine financial statements to ensure that they are accurate and comply with laws and regulations

• Compute taxes owed, prepare tax returns, and ensure that taxes are paid properly and on time

• Inspect account books and accounting systems for efficiency and use of accepted accounting procedures and identify potential risks for fraud

• Organize, analyze, and maintain financial records

• Assess financial operations, identify risks and challenges, and make best-practices recommendations to management

Suggest ways to reduce costs, enhance revenues, and improve profits

Accountancy myth #3: I only need to worry about accounting during tax time.

While April is the month that people begin to really hone in on their taxes, it doesn’t need to be so stressful. Tax Day becomes far less painful if you follow accounting best practices all year round.

• Many small business owners — especially many new entrepreneurs, gig workers, and freelancers — might not really think about the financial side of their enterprises until taxes are due.

Tips: Even if you can’t afford a professional, you should be continually focused on accurate bookkeeping and accounting to avoid winding up on the wrong side of the Internal Revenue Service. However, accounting is not just for the IRS — it’s also so your business can thrive and expand.

Accountancy myth #4: I don’t want anything to do with accounting because it’s boring.

As a business owner, accounting doesn’t have to become the boring part of running your business. In fact, it can be extremely engaging, especially since it allows you to translate your bookkeeping data into strategies for best expanding your business in the future.

There is definitely a stigma about accountants, but the field counts FBI agents, MMA fighters, and football players amongst its ranks. Once you understand how accounting can help your business grow, you may gain a new appreciation for the skill.

Take a look at some of the benefits that accounting can do for your business, taken from the article, “6 ways accountants can help owners grow their business“:

1. Test growth options with a break-even analysis.
2. Help you find the key performance indicators in your business.
3. Understand cash flow projections.
4. Use industry benchmarks to compare your numbers.
5. Know the value of your business today.
6. Create an advisory board with your accountant.

Hopefully by now evidence demonstrates that accounting is not a dull industry to get into, but if you need more convincing, consider the following:

• Taxation laws are constantly changing, and so accountants are kept on their feet, and need to be able to think outside the box and interpret laws as a large part of their roles.

• Also, accounting can actually be glamorous depending on how you get involved in it. You could help in high-profile investigations, be a celebrity’s financial advisor, play a large part in a company’s cybersecurity, or travel the world to help global companies to comply with international laws.

Accountancy myth #5: As an accountant, my daily life will be sitting at desks and crunching numbers.

We’re going with a heavy and firm NO on this one. Previous points have hopefully started to sway your perspective, however we want to further clarify that the role of the accountant is greatly varied, and it is also changing.

• With technological advancements, accountants are doing less bookkeeping and more advising.

• On any given day, they may attend client meetings, produce financial reports, work on projects, or partake in discussions to improve the overall business.

In short, accountants do not just sit and stare at excel all day. (It’ll be nice if we could sometimes get paid to do that, though!) Accountants can also work in financial accounting, auditing, forensics, budgeting, cost accounting, and government accounting.

The following are examples of types of accountants and auditors:

• Government accountants maintain and examine the records of government agencies and audit private businesses and individuals whose activities are subject to government regulations or taxation.

  • Accountants employed by federal, state, and local governments ensure that revenues are received and spent according to laws and regulations.

  • Their responsibilities include auditing, financial reporting, and management accounting.

• Management accountants are also called cost, corporate, industrial, managerial, or private accountants. They combine accounting and financial information to guide business decision making. They also understand financial and nonfinancial data and how to integrate information.

  • The information that management accountants prepare is intended for internal use by business managers, not for the public.

• Public accountants have a broad range of accounting, auditing, tax, and consulting tasks. Their clients include corporations, governments, individuals, and nonprofits.

• External auditors check for proper management of an organization’s funds, sources of revenue, and internal controls, such as financial data preparation or managing risks to cybersecurity or the supply chain.

  • They are employed by an outside organization, rather than the one they are auditing.

  • They review clients’ financial statements and inform authorities, investors, and regulators that the statements have been correctly prepared and reported with no material misstatements.

• Information technology (IT) auditors review controls for their organization’s IT systems to ensure that both financial and nonfinancial data come from a reliable source.

• Internal auditors have duties that are similar to external auditors, but these workers are employed by the organization they are auditing.

  • They identify ways to improve the processes for finding and eliminating waste, fraud, and other financial risks to the organization.

  • The practice of internal auditing is not regulated, but the Institute of Internal Auditors (IIA) provides generally accepted standards.

More info on the various roles of auditors and accountants can be found on the official U.S. Bureau of Labor Statistics website here.

Accountancy myth #6: I need a university degree to be an accountant.

You wouldn’t be alone if you assumed that a university degree is a must-have if you want to work as an accountant, but guess what? That’s another myth!

• You can have a successful career in accountancy without ever setting foot inside a university lecture hall.

• Professional accounting qualifications are a great alternative and the beginner levels, such as the AAT Foundation course, often have no entry requirements.

  • AAT qualifications are highly desirable to employers as they give you practical, industry-focused knowledge that you can use from day one. They can also be studied online, allowing you to keep your current job or get some work experience while you learn.

  • To add, all the major UK Chartered bodies have a fast-track path for AAT graduates, so if you’re aiming for Chartered status, you could potentially get there faster than by going straight to university.

Accounting apprenticeships are also another brilliant option, again often allowing you to become fully Chartered in less time than the university route.

Accountancy myth #7: I know nothing about math so I can’t understand what’s going on with my taxes.

Thank goodness you DON’T have to be a math expert to do accounting! Take a look at some interesting facts below:

PAST: For many centuries, bookkeeping and accounting required extraordinary math abilities. Errors meant money went missing or the business received unwanted attention from tax authorities.

PRESENT: In the past few decades, the math part of accounting is now almost entirely digitized. As long as you can use a calculator, you now have enough math skills to do basic accounting.

• Note: But being able to understand and double-check your business’s books by hand will help immensely, especially if you encounter numbers that don’t add up. Still, software and calculators make this much easier today.

There are many resources available for free that cover what figures, equations, and formulas you should be paying special attention to as a small business owner.

Check out the list of related articles below for even more debunked myths on accounting!

• The 7 Most Common Misconceptions About Accounting

• 4 Common Myths About Accountancy