February 13th, 2019 | Updated on February 15th, 2019
Common goals of bookkeepers as well as accountants often make people believe that their roles are same, or they perform similar tasks, which is not correct.
The processes that bookkeepers and accountants handle are different which influences their roles that support businesses in various stages of the financial cycle. Bookkeeping focuses on financial transactions only that makes it more administrative and transactional in nature.
On the other hand, accounting measures and summarizes the activities of the company and communicates the results to management and other stakeholders. The critical thing to know is that accountants can be bookkeepers, but bookkeepers cannot be accountants. The biggest difference between accounting and bookkeeping is that accounting involves interpreting and analyzing data and bookkeeping does not.
Businesses either employ bookkeepers or hire a part-time bookkeeper depending on the needs and many businesses do neither of it but seek Darcy Services Quickbooks Bookkeeping that provides full-service automated and online bookkeeping services to all sizes of business.
To decide what kind of services you would prefer and whether you would like the accountant to handle the bookkeeping job instead of hiring a bookkeeper, you must know the finer differences in the roles as well as functions of both so that you can take a well-informed decision.
Accounting for the common man is all about debits and credits, and it is the job of bookkeepers to post all such entries in the ledger that helps in tracking financial transactions.
Bookkeepers raise invoices, complete payroll and even maintain and balance the general ledger, subsidiaries and historical accounts. The biggest task is to maintain a general ledger which is a basic document for recording the earning from sale and expense receipts.
The manual ledger is now a thing of the past as different accounting software is now used for creating as well as maintaining ledgers. The business operations and its complexities influence the bookkeeping operations.
Accounting starts from where bookkeeping ends because the process of accounting consists of using financial information available from bookkeeping records for developing financial models.
Therefore, it is natural that accounting, unlike bookkeeping, is not at all transactional but more subjective.
Preparing financial statements is the primary function of accounting together with adjusting entries for expenses incurred but not appearing in bookkeeping records, analysing costs of operation, completing income tax returns and helping business owners understand how financial decisions impact business.
Accounting reports highlight the key financial indicators that help in better understanding of actual profitability as well as cash flow. The information extracted from ledgers helps to paint the bigger picture of a business that points to the direction in which the company is moving.
Accountants are responsible for creating financial strategies and assist in filing tax returns, financial forecasting and strategic tax planning.
The line between accounting and bookkeeping is gradually fading because many business software related to accounting and bookkeeping merge some of the accounting processes into bookkeeping. Today’s bookkeeping software can generate financial statements that used to be the privilege of accountants.
Good teamwork of bookkeepers and accountants is essential for business success.