Bookkeeping vs. Accounting: What’s the Difference?

Bookkeeping vs. Accounting: What’s the Difference?

One of the most common questions we hear from clients is, “What’s the difference between bookkeeping and accounting? Is there a difference at all?” The answer is yes, there’s a big difference. Accountants are able to provide a wider range of financial services. Whereas bookkeepers will strictly focus on entering, storing and recording of financial data.

Although the terms are sometimes used interchangeably because bookkeepers and accountants share common goals, they actually refer to two different kinds of financial services. Let’s dive into key differences.

What is bookkeeping?

Accurate bookkeeping is the cornerstone of any successful company. Bookkeeping refers to the daily recording, storing, and retrieving of financial transactions for your business (in QuickBooks or other software). The most common business transactions include:

  • Purchases
  • Sales
  • Receipts
  • Payments
  • Invoices

In general, bookkeepers are required to have at least 2-4 years of experience or an associate’s degree in the field. Bookkeepers need to focus on accuracy and be fluent in key financial topics. In most cases, the bookkeeper’s work is overseen by an accountant.

Many business owners who aren’t sure which service to choose to begin with bookkeeping, and then add on accounting services as their business grows.

What is accounting?

While bookkeeping simply involves recording your business’ financial transactions, accounting services take things a step further and also include interpreting, classifying, analyzing, reporting, and summarizing your financial data.

That means accountants won’t just record your numbers and send you a report—they actually review and analyze everything and tell you what it all means and what you should do with that information. Accountants provide higher-level financial services than bookkeepers.

Depending on your specific needs, accounting services can include things like:

  • Financial statements
  • Classification
  • Bank & credit card reconciliations
  • Analyzing sales data & stats
  • Financial projections
  • Cash flow management
  • Consulting & training
  • And more!

Accountants usually have a degree in accounting or a related financial field, and can also get additional certifications (like a CPA). To become an eCommerce CPA, an accountant must pass the Uniform Certified Public Accountant exam and have experience as a professional accountant.

Which is right for you?

In general, the larger or more complex your business is, the greater the need for both an expert bookkeeper and a certified accountant. Many smaller businesses begin with bookkeeping services, and then add other accounting services as they grow.

Bookkeepers and accountants work in tandem to give you a complete financial picture: Bookkeepers look to the past, while accountants look to your financial present and future. Together, they can provide you with the sound financial information and advice you need to make good decisions for your business.

In the end, the most important thing is that someone with experience and expertise in handling your finances—you can’t afford to just wing it! Unless you’re an accountant yourself (and most business owners aren’t), you shouldn’t try to handle your own books or accounting needs. Not only will it eat up your precious time, but without a sound accounting background, it’s easy to get lost amid a sea of paperwork and reports. Ultimately, your business will suffer (not to mention your stress level).

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Chris Giorgio, President

Fully Accountable is a full-service accounting and bookkeeping solution that provides all the benefits of an in-house department with none of the overhead. With services like daily feedback, your own CFO, profit & loss analysis, and more, you’ll have the financial information you need to make informed, strategic decisions for your business. To learn more, visit https://fullyaccountable.com/ or schedule a 30-minute strategy call.

By Rachel Scava

Rachel Scava is the COO of Fully Accountable - a back office solution for outsourced accounting and finance services. Fully Accountable provides full back office services for eCommerce and digital based companies that are looking to grow and scale. Rachel has dedicated her career to helping entrepreneurs and owners reach their highest potential through human ROI. Having discovered that one of the most challenging things for any business is building a high performing team, Rachel has developed processes and procedures to help companies build, train and measure team members that become major assets to the organization. Rachel believes in the theory of Super Employee’s where you can turn any ordinary team member into an extraordinary one. Her passion is people and yours can be too!