What is the Difference between Bookkeeping & Accounting?

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Accounting and Bookkeeping, both are critical components of your Business. Theses two components manage your finances throughout the year and ensure your Business runs smoothly and grow. Ultimately, it is well-managed finance that ensures a successful Business.

As Accounting and Bookkeeping both are in the management and handling of the finance, some Business owners might find it challenging to draw a thin line between them. Of course, they deal with almost the same issues and challenges; few fundamental differences still exist. 

Having access to your financial reports and managing the flow of capital through your Business is equally essential. That’s where your Accountants and Bookkeepers come in. So it becomes crucial for you to understand the critical difference between them to ensure your Business flourish continuously.

Functions of a Bookkeeper

As the name suggests, the bookkeeper is responsible for noting and tracking all the business process’s financial activities promptly. The entries should be accurate, on-time and consistent.

His/Her function includes:

  1. Creating Customer Invoices
  2. Issuing Customer invoices.
  3. Keeping  records of Supplier’s invoices
  4. Managing Supplier’s payment
  5. Creating and maintaining a various set of books with head ledgers and sub-ledgers. For e.g. Fixed Assets, Accounts Payable, Cash, Tax, Costs, Sales and inventory.
  6. Logging Cash receipts
  7. Managing various Business transactions
  8. Employee Payroll management and processing.
  9. Recording inventory changes.
  10. Recording and Managing all Business Transaction related document.

All the activities mentioned above are redundant and needs to be precise. Depending on the Company’s size, no. of employees & Business Structure, accountants choose a set of selected procedures to manage Bookkeeping.

Functions of Accountant

The role of Accountant is paramount in any Business. He/she scrutinize, analyze, interpret, summarize and reports the data and financial information compiled by the bookkeeper. An accountant helps you understand where you stand financially. He/she enables you to measure your economic and Business growth with the help of various reports and results.

Let’s take a look at some primary functions of Accountant:

  1. Preparing financial statements that are based on Business performance
  2. Preparing entries of the incurred expenses and revenue generated are still not recorded by the bookkeepers, also known as Adjusted Entries.
  3. Preparing multiple financial reports
  4. Scrutinizing the cost of various Business operations
  5. Preparing financial statements based on Business’ performance
  6. Preparing Budget
  7. Preparing and filing various tax returns
  8. Offering a 360ᴼ view of the business’s financial situation and growth to the Owners to assist him in taking crucial decisions.

In short, Accountants & Bookkeepers handle everything that’s related to the financial aspect of your Business. His/Her role is critical as He/She helps you take calculated decisions based on their reports.

Unfortunately, this is like a double-edged sword. While having a dependable accounting and bookkeeping team can propel your Business sky-high, having an incompetent team can take your Business down. Any misreporting or incorrect information from these teams can lead you to take financially wrong decisions.

So what’s the solution?

The solution is simple, you need a team of accountants and bookkeepers that are not just well-versed in what they do, but those who work in sync! For e.g., at Probal Consulting Group, all our teams are on the same page for each client. Both teams operate in sync to ensure you get precise and well-researched reports, enabling you to take correct decisions.

So, we would recommend you hiring such an efficient team to achieve the best possible results.

What Accounting and Bookkeeping Problems do you face?

Please let us know in the comment section, and we will reach out to help you with them.

Probal Consulting Group is a leading Taxation, Accounting, and Compliance firm that helps individuals, MSMEs, and other businesses manage their accounting, taxation regulatory compliance affordably.

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