Accounting involves bookkeeping and a lot of other activities. People often juxtapose accountants with bookkeepers, when bookkeeping is actually the initial step in the accounting process.

So yes, bookkeeping and accounting are relevant but not the same thing. They’re both important for communicating existing financial condition, financial activity of a company, and the overall performance.

Both bookkeepers and accountants play an important role for businesses in today’s competitive market. Yet, there are some key differences which must not be ignored. Major differences between the two include:

1. Job roles

Bookkeepers are responsible for identifying, recording, quantifying and classifying all the financial transactions that take place.

In contrast, accountants need to summarize this collected information, interpret it, and communicate the latest transactions which have been classified in the ledger account. Hence, the role of the latter overlaps a lot of skills.

2. Decision making

The information regarding transactions reflects upon the progress of businesses. These are then used to make decisions for the benefit of a business.

Financial decisions cannot be taken depending solely on bookkeeping records. These records have to be interpreted in a realistic manner. However, that’s what the accountants do, so financial decisions are often made based on their records.

3. Role of management

Top management is often not involved with the job of a bookkeeper. The data is only being transferred into a quantitative format. However, management is often involved with accountants’ work as it is serves as a basis for important future decisions.

4. Preparation of financial statement

Bookkeepers don’t have to create a financial statement. Their work is restricted to identifying and quantifying the data. When it comes to accountants, preparing financial statements is part of their job.

5. Tools used

Bookkeepers mainly use ledgers and journals while accountants use a number of tools. These include balance sheets, cash flow statements and profit and loss statements.

6. Sub-categories of jobs

Subcategories for bookkeeping include single entry, double entry and virtual bookkeeping.

Accounting subcategories mainly include management accounting, financial accounting, cost accounting, responsibility accounting and HR accounting. However, these may overlap in some businesses.

7. Requirement of skills

Bookkeeping requires basic skills and the ability to pay attention to small details. Missing out anything can be a huge disaster.

Accounting requires analytical skills as the work get more complex.

Businesses often need either bookkeeping or accounting services. Most startups would want to start with bookkeeping and then slowly move to accounting services. For those who are new to business, we recommend outsourcing these services.

A & B Accounting and Business Solutions, LLC. offers professional bookkeeping services and accounting services Boca Raton, FL. Dial their number today so they can tidy up your business’s number slate!