difference between bookkeeping and accounting

What is the difference between bookkeeping and accounting?

Regarding bookkeeping and accountancy, there has always been a lot of confusion around which is which. Most people think they’re the same thing, however, you’re unlikely to receive both a bookkeeping and accounting service from the same person, as typically the processes involved and areas of responsibility do differ. The major difference between both lies in the process in which the transactions are recorded.

When you hire an accountant in Stevenage, they will have ample knowledge to help you with the accounting process of your business. Since bookkeeping is the initial stage of accounting, hiring a certified accountant can ensure that your bookkeeping process will also be taken care of, should your chosen accountancy firm offer this.

However, if you plan to hire a bookkeeper and expect them to do the work of an accountant, you may be at a loss. To learn more detail about the differences between both, read on. 

Major differences between bookkeeping and accounting processes

Scope of work

Bookkeeping is an administrative process. The bookkeeper must record online and offline bank and cash transfers of business. They are also required to reconcile the bank and ledger accounts entries. They prepare financial statements like balance sheets, cash flow statements, profit and loss statements and petty cash accounts of the business. 

Accounting, on the other hand, is an analytical process. Also, a certified accountant will have proper knowledge of preparing all the books of accounts as mentioned above. However, an accountant’s core role is to analyse the statements and support with critical business decisions. They will review the expenses and help the business to cut down on them. They will monitor the profit level and provide suggestions for profit growth. 

Goals of the work 

The goal of the bookkeeper is to keep the finances on track. They maintain the books daily and set appropriate budgets for keeping the business expenses in check. What about accounting, then? An accountant helps to draw proper insights from the statements prepared by the bookkeeper. This helps to improve the financial health of the company. They provide proper advice on tax deductions, investments and business development. 

You might come across numerous affordable software solutions that can help you with bookkeeping. However, if you have to hire a trained and certified accountant to get proper guidance in terms of the financial aspects of the business, Digitally Accountants is the right partner for you. We offer a comprehensive range of accounting services at competitive prices. Please get in touch with our team for more information.