Bookkeeping is considered a direct method to keep a record of all purchases and sales for a business; however, accounting is the process of summering, interpreting, and communicating the business’s financial transactions. And an accountant can be called a bookkeeper, but a bookkeeper cannot be an account without the proper knowledge and certification.

These days, staying on top of your small business is vital for the survival of the business. It would be best if you made sure that financial data is current and accurate so that you have the proper tools to make a decision to ensure profits.

And as the business grows, the customers, employees, vendors, and other things grow as well. And it can get pretty difficult to keep track of all the things under a single roof. But, with Bookkeeping and Accounting, you can simplify the tasks and make sure that the business runs smoothly.

Both of these terms are interchangeable sometimes, and things can overlap in what they do or achieve. Here is a brief look at the accounting and bookkeeping.

Bookkeeping Vs. Accounting

Bookkeeping is the process related to identifying, measuring, and recording financial transactions. It handles day-to-day tasks of recording financial transactions that include purchases, receipts, payments, and sales. While Accounting is more subjective in nature and provides business owners, some insights based on the data they have at hand.

In simple words, Bookkeeping is about generating data about the activities of an organization. While accounting is about turning data into useful information.

Work of a Bookkeeper

Well, bookkeeping is there in the process as long as a traditional business. A bookkeeper’s job is to maintain the complete records of the money flowing within the business. Bookkeepers are there to record daily transactions in a consistent, easy to read and, most importantly, allow the accountants to perform their jobs.

The tasks of Bookkeeping include recording financial transactions, posting debits and credit, producing invoices, managing payroll, and maintaining and balancing ledgers and accounts.

They are also responsible for maintaining a general ledger, a document that records the amount of sale and expanse receipts. If one wants to get professional bookkeeping, then they can use outsourced bookkeeping services. Many companies provide you the bookkeeping services for all kinds of businesses.

Work of an Accountant

The basic job of an accountant is to analyze the data gathered by the bookkeeper and then provide important insights based on the data to the business owners. The typical accounting tasks include verifying and analyzing the data, generating reports, performing audits, preparing financial reporting records like tax returns, providing information for forecasts, income statements, balance sheets, and more.

In other words, accountants look at the bigger picture and not just limited to the bookkeeping. The accounting process produces reports that bring key aspects of your business’s finances to put together a complete picture. If you want to get insights into your business’s finances, get the best outsourced accounting services from a reputed company.

Accountants will give you a complete picture of where your finances stand and what they mean, and where you can take them in the next few months. You must know that there is a difference between an accountant and a certified public accountant. However, both can prepare the company’s tax returns, but a CPA has more knowledge about the tax codes and more. And accountants have a degree in finance or accounting to get the title of CPA. Apart from the CPA, there are other titles as well which the accountant can hold. They are also qualified for the Bookkeeping job as well.

New Trends of Bookkeeping and Accounting

Both of these forms have been there for a long time, but the operations of both have changed a lot in recent years. And as technology advances, it will change in the future as well. We have listed some of the trends in the field of accounting and bookkeeping here.

  • Merging Bookkeeping and Accounting Functions – The margin between Accounting and Booking is fading away with time. And with the advanced software released for accounting and bookkeeping, some parts of the accounting have been integrated into the Bookkeeping process.
  • Bookkeeping May Become Obsolete – Most businesses still need a bookkeeper, and it will become more than just data entry. But most of these functions will become obsolete in the coming years, and most of the tasks will be handled by the software.
  • Smartphone Usage – Well, since most of the businesses are shifting their operations to mobile, it is becoming easy and intuitive. And most business owners want to access the data from anywhere in the world on different devices.

So, these are the general difference between bookkeeping and accounting. To learn more about bookkeeping and accounting, you can head over to the AccountIOD. It is one of the best blogs on accounting you will find on the internet today. So, go ahead and have a look at what you need for your business.