Bookkeeping and accounting are both pieces of the same puzzle. They are virtually identical, and telling them apart can be a tough ask, especially for anyone who isn’t a bookkeeper or accountant. On the surface, both of these services appear similar even after doing some light research. But they are a lot of intricacies and distinctions involved in these roles. For example, an accountant can do everything a bookkeeper can do, but a bookkeeper can’t do everything an accountant can do.
All the minute details involved in both the roles are easy to miss if you are not looking hard enough. To break down the differences between bookkeeping and accounting, you must grasp what they are separate. Let’s start there then. Let me explain what bookkeeping and accounting services are.
Bookkeeping involves all the basics of finance and accounting. Bookkeeping services include recording and updating all the business transactions in a notebook. You should insert the transactions systematically and correctly for bookkeeping to be done right. A bookkeeper will have to record every tiny detail of a company’s money. Even a small moment of distraction can cause several problems for a bookkeeper. A purchase, as small as a pencil, is also recorded to keep a complete track of the business’s expenditure.
Bookkeepers don’t need to have a degree to work. All you need to have to perform bookkeeping services is a keen eye for detail and a way around numbers. But, while all of this may sound pretty easy to do on paper, it can get overwhelming on certain days. So, to finish up on bookkeeping now, day-to-day record transactions and store all the financial information in journals and ledgers. Now, that is bookkeeping.
Bookkeepers pass the baton to accountants who continue the work carried out by Bookkeepers. Accountants analyze the ledgers and reports that bookkeepers make and maintain. Accountants then prepare all sorts of financial statements like payrolls cash flow statements after analyzing the books. An accountant’s job is to formulate and develop a future financial plan. They give tax advice to the owners and help them make sustainable investments and purchases. An accountant’s job is much more complex than the job of a bookkeeper.
When companies hire people to perform accounting services, they usually look for people with a degree in accounting or finance. In contrast, bookkeepers don’t have to go through any technicalities to get the job done. The same cannot be said about accountants. There are many technical and sensitive elements like taxes and financial statements for accountants to work through.
Now that we have worked through all the details involved in accounting and bookkeeping, we can easily point out the things that make them different from one another.
Differences between Bookkeeping and Accounting:
Bookkeeping is related to maintaining and updating financial transactions in a ledger or a register. Every small day-to-day transaction has to be recorded by the Bookkeeper
An accountant takes over the work of a bookkeeper. They analyze bookkeepers’ work and prepare several documents like Financial Statements and Tax statements. Accounting services also involve planning for the future.
The purpose of Bookkeeping services is to maintain a steady record of all the expenses and transactions done by the business.
The purpose of Accounting has a broader scope. For example, an accountant prepares reports related to all company expenses. In addition, accountants determine the company’s financial health and make plans.
A bookkeeper doesn’t require any technical knowledge or skill to perform their duties.
An accountant, on the other hand, needs to have technical knowledge. From Tax policies to different accounting practices, an accountant needs to be aware of them to do their job correctly.
There is no decision-making done based on a bookkeeper’s work. However, Bookkeepers store records and share them with Accountants.
Many important decisions related to the business are made based on an accountant’s work. For example, an Accountant determines whether or not something is sustainable for the company.
A bookkeeper provides all the financial statements and records to the accountant at the end of the year.
An accountant uses these statements and records to file taxes and prepare reports. These reports allow the management to make crucial decisions.
The final result of bookkeeping is handed over to the accountant.
The final result of Accounting is handed over to the management and suggestions to make decisions.
Despite the various similarities between bookkeeping and accounting, these are too widely different fields. Accounting and bookkeeping services are paramount to any business as accountants and bookkeepers do a lot of heavy lifting. That is why you must know the differences between the two roles. You might be hiring or looking for jobs as accountants and bookkeepers. These differences will help you determine the right technical person for your business. I hope this post has helped you draw a line between the two roles and understand them better.
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