Many people believe that bookkeeping is the easiest thing to do in business. Now, this might be true; however, it is also easy to get the entire understanding of bookkeeping vs accounting wrong. Read on to learn more about the essential differences.
What Does A Bookkeeper Do – An Overview
In simple words, a bookkeeper will be inputting all of your data, including the customer invoices, supplier invoices, and regular direct debits coming out of your bank account. The manual and cloud concepts for bookkeeping are the same.
The bookkeeper has to ensure that every single invoice has been entered into the system so that you can avoid situations where the invoice is missing or lost. So, you must make sure that all of your sales invoices are captured. The best way to do this is to use a cloud accounting system so that all invoices go straight to the system.
Streamline Your Payments with Bookkeeping
As a business, you will have all sorts of payments, such as payments to suppliers, regular payments, and payments to teams, such as subcontractors or wages, depending on how your business is set up. You will have other payments, too. There will be expenses that have gone out of your personal pocket, and if the expenses are exclusively for your business, then these are expenses that go into bookkeeping, too.
The same goes for your bank with all your income. You must make sure that all of your bank transactions are recorded, which will subsequently get reconciled, meaning that it will go to your statement. All these aspects are essentially part of the first stage of bookkeeping. This is where most bookkeepers stop, and the accountants take over.
Bookkeeping and Accounting – The Differences
In theory, the accountant will just check that all of the balance sheet accounts are reconciled and that all payments are put into the right space. You are also looking at whether or not the gross margin stacks up, whether the stock has been posted, and whether any prepayments are needed. The accountant will make sure that your company is following the accounting standards, which exhibits what bookkeeping vs accounting is about.
There could be things that are posted incorrectly. There could also be things that are brand new, out of sync, and not coded properly. The accountant will be picking up on such things and afterward assess what the numbers could actually mean and how good the growth margin of your business is.
The Accountant and Bookkeeper Can Cross Over
The accountant and the bookkeeper do more or less the same thing, which is why they can sometimes cross over, but the accountant’s main concern is to look at whether or not all the numbers are sound and whether the balance sheet reconciles. They will also examine whether the profits and losses appear clean and what P&L means, and then consider the implications for the future.
Streamline Your Business Finances with Intuit
You might want to leverage the financial software of Intuit and streamline your business finances. When it comes to the differences between what a bookkeeper does and what an accountant does, it all comes down to the differences in the focus of the two roles. Bookkeepers record the daily transactions, whereas accountants analyze and interpret financial data.