Bookkeeping versus accounting; Are you consistently confusing bookkeeping and accounting? The two inevitable roles in your financial system and share some similarity. But what are the differences between these two roles? With so many accounting/bookkeeping solutions out there, how do I know which one do I need to move the company forward? Check out this video for more elaborations and see which your company needs at the current stage.
Topic: Bookkeeping v.s Accounting
Bookkeeping: Record what had happened in your business.
[0:25] What is bookkeeping? What does your bookkeeper do? While you running a business, everything is happening. Account payable is going to happen; There are bills that you need to pay; There are also invoices to generate to collect payment from your clients; Inventory moves in and moves out. When all these things happen, a bookkeeper takes everything is happening and record into your ledger. So, bookkeeping is really a data entry work to make sure all events are recorded and for entrepreneurs/small business owners to review these data.
Accounting: create the events happen in your business.
[0:55] On the other hand, an accountant seems to do the same job as bookkeeping. Sometimes, they also do the record and provide the necessary information. The primary difference is — accounting is part of the process of creating those events. Accountants send the invoices, collect payments, also help entrepreneurs to make sure payments are collected correctly. They do records to make sure they have correct and enough information to present. Accountants also do the analysis, they turn those raw data into an actionable data. Higher-level accounting such as senior accountant/controller, they provide business advice and hold you accountable to your priorities and tasks.
- Whom should I hire? An accountant or a bookkeeper?
- How much should I pay for a bookkeeper/accountant/controller?
- What should I know before outsourcing?