What’s the Difference Between Accounting and Bookkeeping?

bookkeeping for business in Vancouver BC downtown

Bookkeeping and accounting may seem similar, but they’re actually two very different services. This isn’t to say that one’s more important than the other. Both are necessary to run a successful business and both deal with different aspects of a business.

So what are the major differences between accounting and bookkeeping? For starters, one involves a bookkeeper and the other an accountant, but the differences go much deeper than that.   

 

Accounting

Accounting is generally focused on insights and long-term financial planning, and an accountant is someone with an accounting or finance degree. Any business owner worth their salt knows they need an accountant to help with more than the business’ taxes.

Along with a degree, accountants can get additional training to obtain titles such as Certified Public Accountant (CPA). A CPA can perform audits or attestations as well as provide certified statements on company financials.

On the whole, accountants place more focus on the big picture of the business. They tend to look at long-term planning rather than the day-to-day running of the business. Accountants will often work with the business’ finances as well as the business owner’s personal finances. This comes in handy when dealing with filing taxes, which is where a good accountant truly shines.

 

Bookkeeping

A bookkeeper, on the other hand, focuses more on the day-to-day running of a business. They may not be able to perform audits like CPAs can, or file taxes and prepare reports in the same way an accountant can, but a business can’t run without good bookkeeping.

A bookkeeper is vital — they manage all accounts and make sure they’re paid on time. This focus on a business’ daily activities provides them with a more in-depth understanding of how the company functions. Generally, a bookkeeper will have on-the-job training. They might even possess certification or additional professional development.

A bookkeeper’s role is largely focused on data entry, records management, payroll, payables and bills, and accounts receivables. Unlike accounting, bookkeeping is more transactional-focused.

 

Which Is More Important?

Neither is more important than the other. Good records management is vital to the financial health of any business. Without good bookkeeping, invoices may go unsent, and thus, a business may be missing out on income. If a business doesn’t pay its vendors, a business’ reputation and credit could be negatively impacted. Without good bookkeeping, a business’ day-to-day operations suffer.

On the other hand, without a qualified accountant, a business could be missing out on vital tax write-offs that could save the company money. A qualified accountant can also help a business to analyze its finances and strategize for the future. Understanding financial records and setting realistic, attainable financial goals and developing methods to measure specific benchmark points is crucial to the long-term success of your business.

Both accounting and bookkeeping are important parts of any business. A reliable bookkeeper and accountant are irreplaceable roles within any company or business of any size. At Genesa, we understand the importance of having both. It’s because of this understanding that we offer both services within our firm for our clients. If your business is looking to improve on its day-to-day operations as well as its financial strategizing, we’d love to help. Get in touch today.

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