So, your business is going from strength to strength, the cash keeps rolling in and now you find yourself in need of some financial help. If you are considering hiring a professional to assist you, then you may be unsure of whether a bookkeeper or accountant is the way to go. Or, like a lot of people, you may have thought they were the same thing. Well – spoiler alert – they’re not. While many people use these terms interchangeably, the truth is they serve different purposes in the finance side of your business. So what is the difference between bookkeeping and accounting, and which one is the perfect match for your business?
What is the difference between bookkeeping and accounting?
Bookkeeping and accounting are both very important cogs in the wheels of a successful business. However, although closely related they are not, as many people think, the same thing. While bookkeepers focus on the day-to-day financial transactions, accountants take a more comprehensive approach to interpreting and analysing said transactions. But the roles of bookkeepers and accountants can and do vary between businesses and often overlap in terms of responsibilities and primary focus points.
What does a bookkeeper do?
At its core, bookkeeping is all about recording and organising your business finances. Bookkeepers maintain financial order, ensuring that every financial transaction and activity is documented correctly. From invoicing to payroll, bookkeepers keep the financial gears of your company turning in a smooth and consistent manner.
Their tasks can include:
- Recording day-to-day financial transactions, including sales, purchases, receipts, and payments.
- Maintaining and balancing general ledgers, ensuring accurate financial records.
- Reconciling bank statements and other financial documents.
- Preparing and sending invoices to clients and customers.
- Managing accounts payable and accounts receivable.
- Processing payroll and ensuring compliance with tax regulations.
- Generating financial reports, such as income statements and balance sheets.
- Keeping track of petty cash and other small expenditures.
What does an accountant do?
Contrary to popular belief, accountants are not merely number crunchers. Nor are we as boring as people make out… While bookkeepers lay the groundwork, accountants step in to interpret, analyse, and derive valuable insights from the financial data. They can paint a bigger picture of your business’s financial health, offering strategic advice, and helping you to make smarter business decisions.
Their tasks can include:
- Analysing financial data to provide insights into the financial health of your business.
- Preparing and examining financial statements for both accuracy and compliance with business regulations.
- Providing strategic financial guidance to help your business grow.
- Conducting financial forecasting and budgeting so you can plan ahead.
- Assisting in tax planning to ensure you don’t get caught short with the tax man.
- Auditing financial transactions to identify any discrepancies or risks.
- Evaluating and recommending improvements to your financial processes
- Collaborating with bookkeepers to ensure good housekeeping of your financial records.
Read our blog to find out more about how accountants can take your business to the next level.
Is a bookkeeper the one for me?
Skilled bookkeepers ensure your financial records are accurate, up-to-date, and compliant with business regulations. By maintaining a solid financial foundation, bookkeepers help you avoid potential financial pitfalls and streamline your day-to-day operations. Their strict attention to detail and organisation is what a business’s financial success is built upon and is the ideal choice for a business in need of some help to expertly manage their finances.
Is an accountant the one for me?
Accountants take the financial data recorded by bookkeepers and transform it into actionable insights. They provide a deeper understanding of your business’ financial position, helping you make strategic decisions to achieve your long-term business goals and get you one step closer to purchasing your own Branson-esque private island.
Read our blog if you are wondering at what stage your business may need help from an accountant.
So which one should I choose?!
The size and specific needs of your business will ultimately determine whether a bookkeeper, an accountant or a combination of the two is your perfect match. In the initial stages a bookkeeper is invaluable for efficiently managing day-to-day transactions, invoicing, and maintaining accurate financial records so your business can run as smoothly as possible.
But as your business expands and the finances start to get a bit more complex, transitioning to an accountant can give you the strategic insights that will help you on your way towards greater business success.
So now you have your answer to what is the difference between bookkeeping and accounting. The choice really hinges on the amount of strategic input you are (or aren’t) looking for.
Still unsure of who to choose?
Don’t sweat it too much, as here at Raeden we specialise in both! Handy, huh?
So whether you require an expert bookkeeper to ensure your financial records are all in order or a seasoned accountant to help navigate the complexities of your financial strategy, we are here to help. Get in touch now to find out which one is right for you.
