To know about the difference between bookkeeping and accounting, it is necessary to know about what bookkeeping is. Bookkeeping is recording the day to day transactions of the company in the books of accounts through some software, spreadsheet or any other documentation form. A bookkeeper is, therefore, a person who records and processes the daily transactions of business operations in their accounts. Bookkeepers usually work for small and medium-sized entities.
Activities of a bookkeeper:
There are many activities involved with the job of a bookkeeper. They may be related to tracing and keeping a record of accounts payable such as keeping the aging reports of accounts payables or they may be related to tracking the expenses through the accounting system of the company. Bookkeepers’ primary activity is to input the information through posting entries in the books of the company. Sometimes different bookkeeping services are assigned separate responsibilities because of the high workflow of tasks. However, the correct definition of bookkeeping is to maintain the books of the company through data entry, doing mathematical calculations, keeping robust records, handling taxes, and creating many simple reports for management usage.
Difference between a bookkeeper and an accountant:
There are high chances of injecting these two terms in each other unless a person is close enough to both of them. In many instances, these two terms are used for the same job description. There are, however, different differences between the activities of a bookkeeper and an accountant.
The roles and responsibilities of a bookkeeper are not as complex as that of accountants. Bookkeepers follow the same process of injecting entries in the books of accounts with the same pattern process. On the other hand, accountants are supposed to deliver more sophisticated services as compared to bookkeepers. Accountants publish reports and amend the data provided by bookkeepers for a bigger purpose. They provide an insight into the financial performance and reports to the upper management.
Bookkeepers are not required to have complete knowledge of accounting to execute their responsibilities. They are not required to have major qualifications to fulfill the bookkeeping responsivities within a business. They can be less experienced and still acceptable to the company. Accountants are highly responsible employees of the organization who are required to have professional qualifications and certifications. They are more experienced and expensive as compared to bookkeepers.
Bookkeepers’ roles finish with day to day activities whose work renews every period. Accountants, on the other hand, have to look at the entire data prepared by bookkeepers and compile in a more usable format. However, bookkeepers can notice the major changes and uncertainties in the accounts of the company because of the bigger interaction with the accounts. Accountants are responsible to find the reasons for these changes and how to tackle them. They have to find solutions to these problems by looking for a reasonable process.
What do companies need? A bookkeeper or an accountant:
While there are different roles involved with bookkeepers and accountants, this completely depends on the nature, size, and activities of the business. Small businesses do not have a complex system of accounts and operations. Their financial activities do not require any specialized skills from their financial accountants. Small business is not able to hire expensive accountants. Bookkeepers are more suitable for small businesses because their activities are easily handled by them.
Large organizations are sometimes required to publish public reports to the general public and authorities, bookkeepers alone cannot fulfill theirs activates. They will need professionally qualified employees to prepare their financial reports presentable to the general public and other stakeholders.