What is the difference between bookkeeping and accounting?


When I started my business, the Accountant was the bookkeeper for the business.  Now the Professional Bookkeeper takes on this role of performing the full cycle record-keeping including payroll.

What is Bookkeeping?

Bookkeeping is the systematic practice of recording the financial transactions of a business. These include:

  • Income
  • Expenses
  • Assets
  • Liabilities
  • Owners Equity

Your bookkeeper will keep your records up to date by entering transactions to track the revenues and expenditures. They will also reconcile the statements and accounts. They do not perform any audit functions.

A Professional Bookkeeper such as myself is knowledgeable about tax laws and can complete your year end, if you don’t have an Accountant.

What is Accounting?

Accounting is the process of measuring, interpreting & communicating financial information to enable business owners to make informed decisions.

Accountants can help you implement complex internal controls for signing authority, tax authority and forming of roles to protect the company, track inventory from theft and waste management.

They can do inventory cost analysis and analysis of the financial statements to determine the performance and health of the business.

Do you need a bookkeeper or an accountant?

If you have a small business – such as a sole proprietorship or a partnership of 2 or 3 people – and your needs are simple, your bookkeeper can file your tax returns and prepare financial statements for your business.

If you have a more complicated business – a partnership of 5 or more –  a corporation – you will need someone qualified to calculate bonuses, stocks, and shareholders of the company.

You may wish to hire a Certified Professional Accountant (CPA) to be your Chief Financial Officer (CFO) or have a CPA in private practice review your books and advise you on your business.

If you have any questions about which professional you need – or if you’d like to talk about help in doing the bookkeeping for your business, please contact me for a free consultation.

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