Top 5 Differences Between Accounting And Bookkeeping
Accounting and bookkeeping are often mistaken for one another. Both functions may be quite similar but are clearly two different professions that are vital to the success of any business organisation. Let us take a look at what makes them different from each other, and how business owners can benefit from getting both services from a reputable outsourced accountancy services.
What is Accounting?
Accounting is defined as the practice of analysing financial information to help business owners make sound decisions about allocating their resources.
Accounting functions like analysing financial statements and auditing are performed by certified accountants — professionals who are experts in preparing and inspecting a variety of financial records. It is the job of accountants to ensure that financial records are accurate and free from errors. Essentially, an accountant is hired to ensure that a business runs properly through careful assessment of its financial operations.
What is Bookkeeping?
Bookkeeping is the occupation of recording the financial transactions of a business. Professionals who are hired to take on this task are called bookkeepers who are responsible for maintaining accurate records of these business transactions.
Financial transactions come in the form of purchases, sales, payments, payroll, and other business expenses. It is the job of the bookkeeper to make records of these financial transactions and ensure that everything is accounted for.
5 Differences that Make Accounting Different from Bookkeeping
- Skills
Accountants are required to have a special set of skills that focuses on analysis. They are expected to be skilled in communicating, interpreting, and summarising financial transactions.
Bookkeepers, on the other hand, are only required to accurately record, measure, and identify financial transactions.
- Financial Statement Preparation
Bookkeepers do not handle the preparation of financial statements. It is the job of accountants to do so as part of the accounting process.
- Role
The bookkeeper’s role is broad, which means the person assigned to the job may typically handle all the financial transactions of a business. They are expected to be accurate in recording these business transactions.
The accountant, on the other hand, may be required to work on a specific accounting function like fixed assets. This role is actually more advisory in nature, as the analyses and insights provided by an accountant help business owners assess the financial status of the company.
- Training/Certifications
Bookkeepers are expected to be accurate in the execution of their job, which is why they are required to have superior math skills and keen attention to detail.
Accountants are also required to possess these qualities and more. They are expected to have adequate education and training, sufficient experience, and certification that proves they are a Certified Public Accountant (CPA).
- Job Environment
The nature of the job of a bookkeeper is usually limited to servicing smaller companies. Accountants can work not only for smaller companies but also in many other industries like financial institutions, government agencies, and tax agencies.
Similarities Between Accounting and Bookkeeping
Both accounting and bookkeeping functions work with financial data. Hence, both professions should possess basic accounting knowledge.
Bookkeepers today are often seen handling the accounting process of smaller companies. On top of recording financial transactions, they can now also handle the classification and generation of financial reports, which is made possible with the use of an accounting software.
On the other hand, accountants usually handle financial transaction recording for a company. They may also be tasked to handle the bookkeeping side of the accounting function.
Importance of Both Functions and How you can Ensure Accurate Accounting and Bookkeeping
Accountants rely on bookkeepers to provide the financial data for analysis and interpretation. Bookkeepers depend on accountants to identify which financial data should be recorded.
Both functions are important when business owners need strategic advice in running the business. A bookkeeper may be relied on to help create the budget for your business, whilst you can depend on your accountant to give you insights on how you can minimise your tax expenses.
It is for this reason that most companies keep both bookkeepers and accountants on their payroll. The work that each employee provides is undeniably crucial in keeping the business financially viable.
As accurate and timely financial reporting is an important aspect that these two functions share, companies are turning to outsourced accounting firms to ensure error-free financial reports that comply with regulatory procedures.
Outsourcing the accounting and bookkeeping functions of a business is becoming popular as firms providing these services are highly experienced and updated with the latest accounting and financial standards. Companies rely on their services so that they can focus better on running the business and do away with having to pay for monthly salaries of an in-house accounting team.
Companies like Corporate Services Singapore offer free service consultation to determine your accountancy needs. From your consultation with them, you can assess the best package that suits your business requirements.
Make sure you get accurate and timely accounting and bookkeeping to secure your company’s financial future. Consider hiring an outsourced accounting services in Singapore to get professional accounting and bookkeeping services that can help grow your business.
