What is the difference between bookkeeping and accounting?
At first glance, bookkeeping and accounting seem to be more or less the same thing. Most of us would probably
struggle to explain the difference if we were put on the spot. This is a big mistake though. The two jobs differ in
a number of ways and each has its own important role to play in the financial affairs of a business. Understanding
these differences is vital to keeping your books in order, so here’s a handy guide to the key elements of each
job.
What is a bookkeeper?
A bookkeeper’s job is to keep detailed day to day records of financial transactions as they occur. All money going in and out needs to be noted in a way that is readily available and easy to understand. A good bookkeeper will check these records on a regular basis in order to spot omissions and discrepancies as quickly as possible. Bookkeepers deal with some of the more hands-on aspects of financial record keeping such as collecting and logging expense receipts and creating invoices. They may also create financial reports in which the data they have collected is presented in an easily digestible way.
What is an accountant?
While a bookkeeper records financial data, an accountant is paid to analyse it. It is an accountant’s job to examine the data collected by a bookkeeper and use it to determine the financial health of the company. A good accountant will be able to spot areas of inefficiency and advise the management on possible improvements. There is also a legal dimension to accounting that is not present in bookkeeping. An important part of an accountant’s job is to make sure that a company’s finances are compliant with the law, for example by checking that tax returns are properly completed.