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Bookkeeping VS Accounting: Differences Between Bookkeeper and Accountant
In the department of financial management of a business, bookkeepers and accountants are the basic building blocks. More often than not, these terms are used interchangeably as they incorporate unique proceedings with important purposes, techniques, and results. For better management of finances and making sure of being compliant with regulations, finding out the contrasting differences and linkages between accounting and bookkeeping is important. Let’s find out these differences.
Understanding Bookkeeping
A bookkeeper is responsible for efficiently recording the financial transaction of an organization on a daily basis. It incorporates the basic financial data that accounting basics rely on. The main aim of bookkeeping is to provide consistent and accurate records of the financial activities that allow a business to easily check their financial stance and health over a period of time.
Important Traits of Bookkeeping
Bookkeeper performs all the recording of transactions for an accurate record of financial transactions like payments, purchases, invoices, receipts and sales as well.
Ledger maintenance is all about financial proceedings that are classified into ledgers, such as general ledgers, sales, and purchases.
On intervals, bookkeeper are responsible for preparing financial statements, financial records, trial balances for making sure that books have accurate financial information, are balanced and error free.
When it comes to modern-day bookkeepers, financial analysis, financial reports, and daily transactions are all done on modern accounting software for a seamless bookkeeping process.
Types of Bookkeeping Systems
Single-Entry Bookkeeping systems are used for each where transactions are recorded a singular time for small businesses and basic transactions.
Double-Entry Bookkeeping systems provide facilitation for a more detailed financial data where every transaction is incorporates at least two accounts. Double-entry systems ensure accuracy and removes errors.
Understanding Accounting
Accounting involves analyzing, evaluating and finding the financial data collected from bookkeeping. It facilitates you with important metrics in the financial performance and proceedings of a business that is important for making informed decisions, strategic planning and being compliant with tax laws as well.
Accounting Software
An accounting software is responsible for performing all the accounting tasks with sharp accuracy and in a time friendly way. These software are a need of modern time. Software’s’ like QuickBooks online, help in recording financial transactions and all the important financial data that if managed manually can take a lot of time and be prone to human error.
Key Traits of Accounting
Accountants are responsible for preparing important financial statements and reports like income statements, balance sheets and cash flow statements.
It involves comprehensive detailing and interpreting accounting principles on basic accounting data for finding out financial health, trends and profits.
Tax preparation is an accountant most important job. They make sure that businesses are complying with tax regulations for preparing income tax returns.
Accountants help you find the right strategic way to gain financial insights, accountants are responsible for recommending cost effective ways, growth tactics and ways to invest more effectively.Â
Categories of Accounting
Financial accounting aims to formulate financial proceedings to provide information to important stakeholders.
Management accounting is all about comprehensive reports for better decision-making.
Tax accounting deals with all the tax related issues like tax compliance, tax filing, and making compliance with tax regulations.
Important Contrasts between Accountant and Bookkeeper
The purpose of bookkeeping is to record and manage transactions, while accounting deals with assessing and explaining financial data.
The scope or aim of bookkeeping is fixed on transaction records, while the scope of accounting is on comprehending and reporting financial values.
Bookkeeping uses tools like ledgers, journals, and important software. Accounting uses statements of finance as its basic tool, while other important tools include cloud-based accounting software.
Bookkeeping primarily doesn’t involve any important decision-making, while accounting requires tactical decisions to gain important insights.
In terms of required skills, bookkeeping involves simple knowledge of financial management and recordings. For accounting you need a comprehensive knowledge about basic accounting principles for financial assessing of important financial data.
Significance of Bookkeeping and Accounting for Businesses
Both bookkeeping and accounting have different purposes as they are dependent upon each other. Bookkeeping involves unprocessed and uncalculated financial data, which forms the basis of accounting. In the absence of a sound bookkeeping, accounting processes would compromise their accuracy and credibility. In the same way, the absence of accounting means that the information collected from bookkeeping would have no use when it comes to decision making and tactical planning.
Perks of bookkeeping
Bookkeeping helps create consistency for the maintenance of the financial data and ensure accuracy.
Compliance with tax rules and regulations is a part of a bookkeeper’s job role.
It ensures a seamless auditing process.
Perks of accounting
Accounting provides an in-depth view of the financial health of a business.
It helps to make budgeting and forecasting easier.
Accounting helps a business in making accurate decisions for cost-effective strategies.
Progression from Bookkeeping to Accounting
For start-ups and small businesses, bookkeeping might be easy in the initial stages. It is when a business experiences rapid expansion that the need for accounting becomes more evident. That being said, the following are the important things that involve a gradual shift from bookkeeping to accounting:
You might need to upgrade from your basic bookkeeping software to a more detailed package involving accounting tools as well.
There will be an ever-increasing need for professional accountants. You can also outsource accounting services to manage your budget.
It involves associating your bookkeeping data with accounting proceedings for better results. For best results you can contact a certified public accountant ( cpa ) for the most accurate results.
Modern-day bookkeeping and accounting
Present-day bookkeeping and accounting have become interdependent on technology and have revolutionized the way we talk about bookkeeping and accounting. These two building blocks of finance now depend a lot on automation, cloud-based accounting software, and artificial intelligence to make accounting and bookkeeping more accurate and efficient. This includes simultaneous financial assessment, automated transaction proceedings, and forecasting analytics for better-informed decisions.
The Verdict
For business owners, bookkeepers and accountant play the role of directing the company towards a prosperous and financially sound future. For this reason bookkeepers do the basic work that is used efficiently by accountants for accurate financial management. Therefore, it is important for an organization to have a grasp on the responsibilities and roles of an accountant and a bookkeeper.
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