What is the Difference Between Accounting and Bookkeeping?

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Do you want to know how to make an accountant spit the dummy? Call them a bookkeeper. While you might not understand the difference between bookkeeping and accounting in more detail. And for whatever purpose, prefer accountants do not like being called bookkeepers.

Much like those people who do not understand the difference between Aussie rules, league, and association football and call them all footy, some small business owners use the terms accounting and bookkeeping interchangeably. In reality, they are two entirely different things.

Knowing the difference between accounting and bookkeeping will ensure you do not make a fool of yourself should be talking to a financial professional. But it can also help your small business requirements and find the help it needs. Here are the basics five differences between accounting and bookkeeping.

Qualifications :

The main reason accountants hate being called bookkeepers is that they spent years in university earning a specialist degree before joining the workforce. Some go one step further by acquiring special qualification requirements such as Chartered Accountant (CA) or Certified Practicing Accountant (CPA) certification. However, these are not required for them to practice their profession. Both of these make accounting a specialized industry.

On the other hand, bookkeeping is not a profession that requires a higher education. Anyone can become a bookkeeper. Despite this, accounting resources small business a bookkeeper can be an invaluable resource for a small business owner. You can check out our past blog to find out more about what a bookkeeper does. 

Thinking :

Bookkeepers are not necessarily for the paid to think they paid to record financial information. An experienced accountant can be invaluable in helping the other hand will be skilled in big picture thinking. They can take a look at the report for financial information collected on the bookkeeper and give insights, investigation regarding the financial strength of your small business. They can also make suggestions on how to company can grow your business, cut costs ideas, or use money more efficiently.

Think of your business as a school. You are the accounting school principal, the teacher skills for accounting, and the teacher’s assistant skills for a bookkeeper. The teacher creates the lesson plans and tests and sets the direction of what students will learn based on the goals the principal has given them. The assistant teacher is serving with recording exam results and tracking student progress, but she does not decide what happens in the classroom.

Necessity

A Small Accounting Business, while useful, is not a necessity for accounting and bookkeeping. It can help business owners make informed management decisions in terms of financial planning and strategic decision support, but it is not always needed for survival. Bookkeeping is required no matter how high or small your company is.

If you currently do not employ a bookkeeper task, such as chances are you performing their tasks yourself. Things such as payroll, expense tracking, and the completing stock take and filing of BAS statement forms are all bookkeeping duties that must also keep records done regularly.

Day-to-Day

Bookkeepers are far more interested in the essential day-to-day duties of a business. Since they are responsible for tracking expenses and payments, petty cash, and payroll with other financial functions, they will be your go-to person should you want to know more about cash flow.

Accounting does not involve any of your company’s day-to-day functions. Instead, an accountant is concerned with the big change issues facing your company, such as taxes or investment opportunities. An accountant can handle basic also provide oversight of bookkeeping work, checking to see if it is still to be done correctly.

Price

For most business owners, the only thing that matters is the price. And while this is an important consideration, being the cost cheapskate if it happens to your company’s finances is not ever a brilliant idea. Without question about various business issues, hiring a bookkeeper will be cheaper than producing an abroad accountant. But there are other things to consider.

For beginners, do not feel compelled to hire one or both on a full-time basis outsourced accounting. Doing this is just plain foolish. Most small businesses only need bookkeeping services for a few hours each week and plenty of qualified bookkeepers out there ready to work on an hourly basis or for a monthly minimum fee.

While more expensive, many accounting firms also work on an hourly rates basis or per-consultation working. Hiring one during tax time or when considering hiring an accounting business expansion could offer value since they will know how to save you money.

You need both to succeed

According to The Voice of Business survey conducted with Bentleys, two of the four most time-consuming tasks spend for small and medium-sized enterprises are accounting and bookkeeping. And for business owners that do not get any help with both, it is easy to understand how those two separate roles can blend.

Both do deal with economics, but that anywhere the common ground offers ends. What is more, at some points you will need both to be successful. Maybe you can handle some bookkeeping duties, do you become a bookkeeper that can handle any accounting duties. The fact is that not is a great solution.

And business owners continue to be on both roles despite a lack of skills or capacity to take on one, let alone both. Much like the stubborn neighbor with a broken car who refuses to take it to a mechanic, many business owners refuse to seek help when it comes to bookkeeping or accounting. Often, this is inevitable to the detriment of their company.

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