Bookkeeping and accounting are important pillars in the financial management of your business. While the two are interrelated, their goals are separate. One deals with record-keeping, while the other deals with analyzing.
In this article, we are going to discuss the main difference between bookkeeping and accounting.
Bookkeeping refers to the administrative tasks of recording transactions and keeping them organized. This is a consistent process that helps a firm manage its financial data on a day-to-day basis.
Managing payroll, keeping a tab of debit and credit, generating invoices, tracking receipts and bills, making balance sheets, creating income statements, and maintaining ledgers are some of the typical responsibilities of a bookkeeper.
Based on how small or big your company is, you can choose to maintain books on a daily, weekly, or monthly cycle. The details of your sales need to be updated on the general ledger along with the right documents to support them.
Accounting takes the data recorded through bookkeeping and analyzes the overall financial situation of your business with its help. The accountant generates financial models and prepares reports to help investors and other stakeholders understand the financial standing of the company.
The accountant goes deep into the information recorded in the general ledger to gain insight into the cash flow of the business.
Their job involves evaluating financial statements, filing income tax returns, examining the cost of operations, and helping decision-makers of the company make important decisions regarding finances, forecasting, and tax planning.
In small firms, the accountant often manages the bookkeeping, but in bigger companies, the two roles are separate. Both the bookkeeper and accountant deal with financial data, but their nature of work is different. The bookkeeper keeps a track of the transactions, while the accountant studies and analyzes the data to report the financial standing of the company. The accountant's job is more like that of a consultant.
The credentials of the two roles are also different. There is no specific degree required to become a bookkeeper – attention to accuracy and sound knowledge of financial processes are some of the prerequisites.
The accountant is generally required to have at least a bachelor's degree in accounting or a degree in finance. However, the expected qualification for the role can vary from one company to another.
Whether you're a small business owner or you run a huge firm, you know the importance of a good financial team to help you out. Some firms, especially businesses that have recently taken off, prefer to do their accounting in-house, whereas some prefer to outsource it to an expert to keep things flawless. Whichever way you choose, make sure your bookkeeping and accounting responsibilities are in reliable hands, as this can make or break your business.
If you are looking for trusted professionals to take care of all things accounting, Accountants Now is here to help. From bookkeeping, accounting, and tax filing, to managing payroll, we streamline every financial process, so you have one less thing to take care of. For any queries, feel free to contact our team.
Stay up to date with all things Accountants Now, tax law changes, tips and tools, and the industries best practices.