Is Bookkeeping and Accounting the Same?

Now, if bookkeeping is the foundation, accounting is the first level of the building on top of it. Accounting is about analyzing and interpreting all of the data that the bookkeeper recorded. A bookkeeper will use that data, and they will provide insightful advice when it comes to the financial side of your business. Making informed decisions when you have a business is something that you must ensure, and an accountant can help with that. You cannot make a decision if you don’t know all of the factors. Bookkeeping and accounting are like siblings, they work together to make their parent happy.

Accounting has many functions, and knowing them can help better understand the difference between bookkeeping and accounting. Let’s take a look at some of the key functions that it has, and what do they mean for you and the business.

• Budgeting – You need to allocate your money wisely, and you must always have a plan – considering multiple situations – on how to allocate said money. What if you need to fire someone, or someone resigns? What if you lose a client? You need to know how you will organize your finances in these situations.
• Analysis and reporting – An accountant will provide reports (loss and profit statements, balance sheets, etc.). But they will also identify financial trends, and other similar things.
• Tax compliance – Adhering to regulations should be one of your priorities. Penalties are not neither fun, nor cheap. Correct tax filing is essential. An accountant will also identify deductions, and so you can minimize tax liabilities.
• Financial guidance – You will have access to a professional opinion, before any decision that’s related to your business; because any decision is related to money.

These are only some of the bigger things that an accountant will do for you. But there are many tiny tasks that go unseen, that need someone to do them, and that someone is an accountant.