https://www.completecontroller.com/wp-content/uploads/cclogo_main-long-300x63.png 0 0 Complete Controller https://www.completecontroller.com/wp-content/uploads/cclogo_main-long-300x63.png Complete Controller2017-05-01 10:15:452017-10-31 18:16:05Bookkeeping vs. Accounting- What’s the Difference?
Bookkeeping and Accounting are commonly mistaken for one another. Although similar in nature, there are some key differences that set them apart. Here, we will discuss the different tasks between Bookkeepers and Accountants.The role of Bookkeeping and Accounting is commonly misunderstood. They both share a common goal: finance. However, their tasks may overlap in some areas (depending on your company or financial software), but the key difference is that a Bookkeeper’s role is to maintain financial transactions and Accountants analyze the data input by bookkeepers to assist business owners in forecasting and give financial advice. This is a very general and simple definition. In this article, we will discuss the key differences between Bookkeeping and Accounting in greater detail.
BookkeepingGenerally speaking, a Bookkeeper makes significantly less than an Accountant. Bookkeepers require less higher education (usually only an associate’s required) and generally cap out at about $20,000-$30,000/year. This is not to downplay the role of a Bookkeeper by any means. This is just to give business owners an idea of what to expect. As stated before, a Bookkeepers key role is to maintain and record financial transaction. Here is a general list of Bookkeeping tasks:
- Recording and maintaining financial transactions. Such as, processing invoices, recording receipts, payments, and other transactions. This is commonly known as the General Ledger.
- Maintaining the payroll system.
- Preparing financial statements (getting it ready for the Accountant).
- Managing accounts receivable and accounts payable (who owes you and what you owe).
- Creating and Maintaining Financial Systems.
- *Note- this is one of those tasks that can be either/or. Nowadays, there are fantastic softwares such as QuickBooks that serve as a home for all your financial recordings. However, if these systems are not set up properly-this can cause serious problems down the road. This is one of those cases where you will want to have someone with extensive knowledge of the program and have set them up before.
AccountingAs stated before, an Accountant’s general role is to analyze financial data, past and present, and assist business owners in financial decision making, whereas the Bookkeeper’s role is to maintain that data. An Accountant’s qualifications usually require a Bachelor’s degree, minimum, and salaries generally start at $60,000/year. Notice that I said ‘start’ rather than ‘cap’ like I did Bookkeepers. This is because Accountants qualify for an array of certifications that can boost that number such as a CPA certification. The more education, experience, and certifications Accountants have, the higher their salary goes. Here is a list of general Accounting tasks:
- Analyzes financial data- creates business plan based on that data.
- Accountants are trained on the U.S. Tax Code. They can not only do your taxes, but also make sure you get all of the deductions and rebates your company qualifies for to keep costs low.
- Corporate reporting and compliance.
- Financial management advice.
- Finalizes and edits financial statements. (Balance Sheet, P&L Statement, Cash-Flow)