What’s the Difference Between Bookkeeping and Accounting?
They are related, both in the financial field, and there is overlap, which is why it gets confusing. Generally, an accountant has an accounting degree, and often they do taxes and analysis, things like that, which are more, you could say, “high level.” A bookkeeper or bookkeeping firm manages the finances of your company from a strictly transactional point of view, handling every specific transaction of money in and money out. They can help you with all the financial functions of your company. They can help you pay your bills and/or track your bills and help you send or track your invoices. They can handle your payroll, payroll taxes, and payroll reports.
Most accountants don’t do that, but where accountants do taxes and do payroll there is overlap. In general, though, an accountant will file taxes or do audits for big companies, things like that.
I tell people that I do outsourced accounting department services, which can be many different things that can be called a finance department, a treasury department, or an accounting department. Essentially, anything that you need done within your company that has to do with money in or money out is something a bookkeeper can handle. Some bookkeeping firms even file taxes for clients.
Oftentimes, accountants do not do bookkeeping at all. If you give an accountant your books to file your taxes or to help you with your books, they will often merely enter adjustments or journal entries so that they can do your taxes, which will not help you manage your company or make your books accurate recordings of what transpired. They just enable you to file the tax returns.
Accountants have specific roles: audits, taxes, forensic accounting, things like that. Accountants have to go to school for four years and then do a year of testing to be a CPA, plus do continuing education yearly to keep up with changes.
(Jokingly, I often say that bookkeepers can do accounting, but accountants can’t do bookkeeping. While not always true, often it is, and I have seen bookkeeping done by CPA firms that made me cringe. Then again, I cringe every time I see bookkeeping that was paid for and isn’t perfect…)
At Solvency Now, our mission statement is “perfect and complete financial records that result in a business owner’s peace of mind”.
Let me know if you would like some peace of mind on your finances.
Maya Weinreb | Founder & CEO