What's The Difference Between Bookkeeping & Accounting?
Bookkeeping and accounting are often terms used interchangeably. While they are similar, there are also some key differences to know.
Let's start with how they're alike.
While they may share the same goals and must work together closely, they each support different stages within the financial cycle.
A bookkeeper's main job is to identify, measure and record financial transactions in the books, and in a timely fashion. Bookkeepers help keep systems orderly and records accurate.
Bookkeepers are often the gatekeeper for all financial transactions that flow through the company. Typically, they're the first to open and review vendor bills, process payroll, issue invoices to customers and scrutinize bank statements.
The bookkeeper is responsible for handling all the financial data as it flows into the company and entering that information to the accounting system. Without a good bookkeeper managing all that data and keeping records with accuracy and efficiency, a company could face big problems like unreliable reports, payroll snafus, hefty interest charges, and late fees.
Accountants typically operate at the 30,000-foot level. Their job is to review financial and other accounting reports and interpret them to help management make good decisions.
Traditionally, they don't touch every invoice that comes through the door (or any at all) and are less involved in managing the data underpinning the reports than they are in understanding and conveying the story behind the numbers.
Many accountants are also CPAs (Certified Public Accountants) and are able to prepare and submit tax returns.
With recent technological developments--- like automatic data entry capabilities -- more and more, the roles of accountant and bookkeeper are fulfilled by the same person, which can be especially true in small businesses.
With programs like QuickBooks and Sage, for example, bank and credit card accounts can be connected directly to the accounting software, so data management is far less time-consuming than once it was.
Some bookkeepers may take advantage of these time-saving capabilities to spend more time educating themselves on how to read and summarize financial reports, while accountants have an easier time managing data and so may take on bookkeeping duties.
Many small businesses don't necessarily need or perhaps cannot afford a full time, on-staff bookkeeper or accountant. So many are outsourcing these functions which, with modern accounting software and programs like Zoom and Asana, can be delivered either virtually or onsite.
If you're considering outsourcing your bookkeeping or accounting function, we're happy to hop on a call so you can learn whether The Business Builders might be a good solution for you.
Let's start with how they're alike.
How Are They Similar?
- Both require a basic fluency in accounting terms and principles, and (not surprisingly) a good deal of 'numbers sense.'
- Most are experts in one or more of the most common financial software programs (think: QuickBooks, TurboTax or Sage).
- They must work closely together in an organization to be effective and generally share the same goals.
- They must have an intimate knowledge of how a company operates, from revenue streams to cash outflows.
How Are They Different?
While they may share the same goals and must work together closely, they each support different stages within the financial cycle.
Bookkeepers
A bookkeeper's main job is to identify, measure and record financial transactions in the books, and in a timely fashion. Bookkeepers help keep systems orderly and records accurate.
Bookkeepers are often the gatekeeper for all financial transactions that flow through the company. Typically, they're the first to open and review vendor bills, process payroll, issue invoices to customers and scrutinize bank statements.
The bookkeeper is responsible for handling all the financial data as it flows into the company and entering that information to the accounting system. Without a good bookkeeper managing all that data and keeping records with accuracy and efficiency, a company could face big problems like unreliable reports, payroll snafus, hefty interest charges, and late fees.
Accountants
Accountants typically operate at the 30,000-foot level. Their job is to review financial and other accounting reports and interpret them to help management make good decisions.
Traditionally, they don't touch every invoice that comes through the door (or any at all) and are less involved in managing the data underpinning the reports than they are in understanding and conveying the story behind the numbers.
Many accountants are also CPAs (Certified Public Accountants) and are able to prepare and submit tax returns.
How the Roles Are Merging
With recent technological developments--- like automatic data entry capabilities -- more and more, the roles of accountant and bookkeeper are fulfilled by the same person, which can be especially true in small businesses.
With programs like QuickBooks and Sage, for example, bank and credit card accounts can be connected directly to the accounting software, so data management is far less time-consuming than once it was.
Some bookkeepers may take advantage of these time-saving capabilities to spend more time educating themselves on how to read and summarize financial reports, while accountants have an easier time managing data and so may take on bookkeeping duties.
Outsourcing
Many small businesses don't necessarily need or perhaps cannot afford a full time, on-staff bookkeeper or accountant. So many are outsourcing these functions which, with modern accounting software and programs like Zoom and Asana, can be delivered either virtually or onsite.
If you're considering outsourcing your bookkeeping or accounting function, we're happy to hop on a call so you can learn whether The Business Builders might be a good solution for you.