How Bookkeeping And Accounting Services Are Different

May 15, 2024

It’s hard to distinguish the differences between bookkeeping and accounting because the duties of each are so interconnected. Still, it’s worth knowing how bookkeeping and accounting services are different. For example, knowing the difference between whether you need a bookkeeper or an accountant can help you make better hiring decisions.

What is bookkeeping?

Bookkeeping is the process of recording financial transactions in a company’s general ledger in a way that’s consistent and compliant with financial reporting frameworks. Bookkeeping tasks include:

  • Posting debits and credits to the appropriate accounts
  • Producing invoices
  • Preparing financial statements
  • Reconciling and balancing general ledgers and accounts
  • Completing payroll

The complexity of a company’s bookkeeping depends on its size and the number of transactions completed on a daily, weekly, or monthly basis.

What is accounting?

Accounting is the process of producing financial reports from financial records. While bookkeeping is transactional, accounting is more focused on reporting and interpretation of a company’s financial information.

Accounting tasks include the following:

  • Preparing adjusting entries, which include expenses that have occurred but aren’t yet recorded in the general ledger yet
  • Reviewing financial statements
  • Analyzing a company’s cost of operations
  • Preparing and filing tax returns
  • Communicating with senior management about financial reports and the financial impact of business decisions

Bookkeepers vs. Accountants

Although bookkeepers and accountants do similar work, their roles and credentialing requirements vary. Because bookkeepers are more focused on recording and reconciling financial transactions, they must be knowledgeable about major accounting topics and prioritize accuracy in their work.

To be an accountant, a person must have a bachelor’s degree, either in accounting or finance. An accountant with many years of experience and the proper education can become a Certified Public Accountant (CPA), a professional designation that comes with higher standards and equally higher earning potential.

The closing entry on bookkeepers vs accountants

There is a lot of work involved in keeping detailed financial records and regularly analyzing them for practical takeaways. If you need help with recording and reconciling financial transactions, consider hiring a bookkeeper. But, if you’re ready to turn transactions into takeaways, give MBS Accountancy a call! We’d love to help you gain clarity and control over your company’s financial performance.