What Is Difference Between Accounting and Bookkeeping?

Are you struggling to run your business and keep up with your administrative obligations? For a small business with limited resources to hire additional staff, working for your business as well as doing the bookwork can be exhausting. Moreover, it may be hurting your business and restricting business growth.

If you’re burning the candle at both ends and in desperate need of a helping hand, then the first place to start is by reducing your bookkeeping duties. After all, it’s cheaper to hire someone to do your books every once in a while than it is to hire another employee. So, the question then becomes, ‘do I need an accountant or a bookkeeper?’.

It’s not uncommon to not know the answer to this question. Many Australians don’t know the difference between business accounting and bookkeeping, which is why we’re going to dive into this subject today.

Continue reading to learn the difference between accounting and bookkeeping so you know which professional is right for your needs.

What is accounting?

Accounting involves maintaining and auditing financial transactions and preparing various reports for businesses. Standard reporting may include – but is not limited – to cash flow projections, taxable income, taxable deductions, business transactions, and general financial statements.

Additionally, accountants offer an array of business support services. Such services include bookkeeping, payroll, risk management, BAS & IAS preparation and lodgement, tax return preparation and lodgement, tax advice, cloud-based accounting software solutions, strategic planning, financial planning, budgeting, and benchmarking. Accounting is also beneficial for individuals as well as businesses.

For more information about business accounting, read ‘How an Accountant Can Help a Small Business’.

As you would have noticed, bookkeeping falls under the accounting umbrella. NAB’s Key Insights into the Australian Accounting Industry Report found that 80% of accountants offer bookkeeping as a service and that 21% of SMEs turn to accountants for this service. Moreover, the same report found that 6% of SEMs most value bookkeeping. Of course, these are just statistics from accounting firms that offer bookkeeping services – statistics from standalone bookkeeping businesses are not included.

What is bookkeeping?

Bookkeeping involves recording financial transactions for businesses. Typical transaction recording includes sales, receipts, purchases, and payments. Other tasks which fall under bookkeeping include BAS & IAS preparation and lodgement, payroll and superannuation processing, management report preparation, data entry, bank reconciliation, and accounts payable and receivable.

For more information, refer to my earlier post, ‘What Is Bookkeeping and Why Do I Need a Bookkeeper?’.

Which is right for me?

Now that you know the difference between accounting and bookkeeping, you should have a clear idea of which service will best aid you.

While there are areas of bookkeeping and accounting that overlap one another, bookkeepers typically only handle the basic accounting functions of recording and categorising financial transactions. In contrast, accountants take bookkeeping data, analyse it and devise strategic plans to benefit businesses.

Businesses can benefit from both accountants and bookkeepers; it really just depends on the size of your business and the complexity of your financial statements. If you run a small business, then bookkeeping services may be all you need to get on top of things. On the other hand, if you have a company with many staff, then the full services and additional expertise provided by accounts will give you a leg up.

Conclusion

Trying to manage every aspect of a business; both dealing with customers, managing staff, and keeping up with your bookwork and compliance needs, will undoubtedly run you down and could even end up costing your business. If you’re becoming overwhelmed with responsibilities, then availing of bookkeeping or accounting services may provide the relief you need.

Whether you would like assistance with bookkeeping or accounting, you can rely on Grow Advisory Group to provide the helping hand you need. We have a highly-experienced team of Gold Coast Accountants and bookkeepers on hand to assist with your business needs.

Reach out to our friendly team to arrange a no-obligation chat to discover how we can save you time and money with our business support services.

 

Disclaimer: The information contained in this blog is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from an accountant and/or financial adviser.