Bookkeeping differs significantly for service-based and product-based businesses due to the nature of their operations. Service-based businesses focus on tracking revenue from client services, managing invoices, and monitoring expenses like salaries and office costs. They typically use accrual or cash accounting with minimal inventory concerns. In contrast, product-based businesses handle inventory management, cost of goods sold (COGS), and supplier payments. Their bookkeeping involves tracking stock levels, managing purchase orders, and ensuring accurate financial statements reflecting inventory changes. Additionally, product-based businesses often face complex tax requirements, including sales tax on goods, whereas service businesses may have simpler tax structures. Despite these differences, both require diligent financial tracking to ensure profitability and compliance.
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