Business

Accounting vs Bookkeeping: What are the Differences?

In order to maintain continuity of a business, a business owner must be familiar with accounting and bookkeeping. It is a very critical aspect of a business. Every business owners must be able to manage their money in the best way possible. This is to avoid any unwanted financial problems on a daily basis. Thus, all transactions must be monitored each day. All financial data of the business must be kept current and accurate. By doing so, you can eventually make better business decisions so that you minimize the chance of making the wrong choices or coming up with a strategy or plan that is not suitable with your company’s financial capabilities.

Doing accounting on your own sounds plausible, especially if you are a small business. But as a business owner, you surely have other responsibilities and tasks that are equally critical in the betterment of the business. Thus, you must be able to assign the right person to do the job for you so that the business can run smoothly.

In general, there are two ways you can get accountants or bookkeepers for your business. You can either hire in-house staff or you can outsource the service of professional accounting or bookkeeping firm. The latter is getting more common these days as it is highly beneficial.

What concerns people is that they don’t understand whether they should outsource an accounting service or a bookkeeping service. At a glance, the two terms can be used interchangeably. But actually, there are a few differences that all business owners should understand so that they can make the best choice that suits their business the most.

Bookkeeping

The task of a bookkeeper is to handle financial transactions recording. This is what they have to do every single day without fail. The transactions in a business include payments, receipts, and purchases. With the obtained transaction, a bookkeeper must be able to generate data about the activities of the business or organization they work for. It is rather simple and it is best for businesses that are not yet too big or complex.

Accounting

The accountants’ job like A1 Business to turn the financial data of a company and make it into information. Accountant’s job is slightly more intricate, as they need to verify data, analyze data, and create reports. They also must be able to perform audits and report financial records such as tax returns, balance sheets, and income statements.

To put it simply, an accountant’s work’s scope is larger and they tend to look at the bigger picture. With the information they generate, they must be able to conclude the condition of the business. They must also be able to predict where it is going and see if there is going to be any problem in the future by forecasting. Then, they should try to come up with ways to avoid any loss from happening.

An accountant is best for consulting companies. Smaller businesses usually outsource the service of bookkeeping because supposedly, it is enough. In general, the two options have similar benefits.

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