The difference between Bookkeeping and Accounting
Are they equal or just related? Which of them is a broader term? Does bookkeeping include accounting or vice versa? Can they be used interchangeably?
Make sure you are getting the best value from each
A bookkeeper records the information regarding the transactions and financial activities of a business.
Typical bookkeeping tasks include recording (posting) transactions, posting journals processing payroll, preparing and send invoices, paying bills, recording payments, reconciling banks accounts, preparing internal reports and perhaps draft financial reports for the manager or owner.
Bookkeepers make sure the figures required by the accountant are complete and accurate and are made available for the preparation of statutory financial reports and tax returns etc.
A bookkeeper accumulates, organises and records the transaction information of the business and files or stores the information in a way so that it is able to be easily retrieved and verified if need be.
An accountant designs and monitors the record keeping system that the bookkeeper will use and establishes controls to make sure the system works well. An accountant verifies and analyses the information recorded by the bookkeeper and prepares reports, professional advice and other services to assist the business owner meet their statutory obligations and make progress towards their goals.
Accountants stay up to date with the latest tax laws and provide advice on how to best manage a business’s tax affairs. A bookkeeper (unless registered as a Tax Agent) is specifically prohibited from providing taxation advice. An accountant may additionally assist the business owner by preparing budgets, cash flow forecasts and by arranging regular meetings to review progress.
An accountant is dependent on the accuracy of the information provided by the bookkeeper so it is essential that your bookkeeper is suitably qualified and experienced and maintains regular communication with your accountant to ensure that the bookkeeping is being completed to the accountant’s satisfaction. This will eliminate the need for costly rework and assist the accountant create a complete financial picture for the business owner.