Bookkeeping And Accounting Differences

Bookkeeping and accounting differences are often confused. There are very specific differences between Bookkeeping and accounting. Both bookkeeping and accounting are business functions that are essential for the effective running of your business. Both accountants and bookkeepers work with financial data and information, but there are key differences in what they do with that data. Here are ten differences between bookkeeping and accounting to help you make the distinction.

Daily Roles For Bookkeeping And Accounting

Roles for bookkeeping and accounting are slightly different. Bookkeepers are responsible for recording all financial transactions of business; money going out and money coming in. This is an essential business function that must be done daily, weekly, monthly, or quarterly in chronological order. Accountants (CPAs) analyze financial data in order to report on the performance of the business. The expertise and knowledge of the bookkeeper are important so the CPA can review the financial data and make recommendations for financials or tax-saving strategies.

Bookkeeping Is A Basis For Accounting

A small but important segment of accounting is bookkeeping. It is the first step in accounting, but not vice versa. You cannot have accurate accounting without bookkeeping, but you can have accurate bookkeeping without accounting. Having the services of a competent bookkeeper at your disposal allows your CPA to complete the review quickly and efficiently resulting in reduced costs to you.

Functions Of Bookkeeping And Accounting

Functions are a substantial difference between bookkeeping and accounting. Bookkeepers record all financial activity, namely bank, and credit card transactions, produce client invoices, apply for payments, maintain the general ledger. While accountants prepare financial statements, analyze costs, complete tax returns, help management understand the financial status of the business.

Operation Vs Financials Decision Making

Bookkeeping reports are used as a record for the business and would be used to make high-level operating decisions. Accounting reports can be used to make informed financial and business decisions about the management and direction of the business.

Qualifications Required For Bookkeeping Vs Accounting

The qualifications for bookkeeping vs accounting are one of the most noticeable differences. As a bookkeeper, you need a deep understanding of the debits/credits and a knowledge of whether a transaction goes on the Income Statement or the Balance Sheet. A bookkeeper also needs a certification for specialized accounting software like QuickBooks® Online to provide high-quality bookkeeping services. As an accountant, you need a minimum of a bachelor’s degree to work. For higher-level services, government certification is required.

Financial Statements

Bookkeeping reports include accounts receivable and payable, uncategorized expense and income reports created with QuickBooks® Online, general ledgers, etc. Bookkeepers create an operational level of accounting reports. Detailed financial statements that help in projections, forecasting, and taxation purposes are created as part of the accounting process.

Monthly Bookkeeping Services Vs Accounting Services

Findings offered by monthly bookkeeping services can disclose an easy to understand the birds-eye view of the profitability and operations of a business. Accounting findings can depict the in-depth even though slightly complex, the financial position of the business.

Level Of Analysis

The process of monthly bookkeeping services requires ground level nuts and bolts analysis. Accountants use bookkeeping reports to analyze the data and compile it into further high-level views that depict the financial state of the business.

Different Levels Of Accounting Vs Bookkeeping

As a bookkeeper, you either carry out single-entry bookkeeping or double-entry bookkeeping. QuickBooks® Online uses double-entry bookkeeping. As an accountant, you can be pulled into a number of different focus areas, such as cost accounting, financial accounting, management accounting, human resource accounting, etc.

The Purpose Of Bookkeeping And Accounting

At their very core, bookkeeping and accounting services each hold a unique purpose. The purpose of bookkeeping is to disclose an accurate view of income and expenditure for the business. The purpose of accounting is to provide a deeper view of the business’s financial statements to managers, stakeholders, investors, creditors and the general public.

Outsourced bookkeeping services carry out all your daily, weekly, and monthly bookkeeping requirements for you. Stilz Bookkeeping services are 100% accurate, every time, offering you a hassle-free approach to your business.

Simplify your finances today, reduce stress, and let us handle your bookkeeping for you.

Sign up for affordable outsourced bookkeeping services today.