There is some crossover when it comes to bookkeeping vs. accounting. But even more importantly, there are some significant differences.
Just like you wouldn't hire a plumber to do an electrician's job, you wouldn't want to hire a bookkeeper when it's an account you need or vice versa. There are some clarifications to consider when you decide between a bookkeeper or an accountant. After all, choosing the proper support can save you both money and efficiency (read: TIME back in your hands!).
That's why we've put together a helpful review about bookkeeping vs. accounting. But first, we need to talk about your books.
Before we get to the difference, we need to clarify what our books actually are!
Although almost everything is digital and automated these days, we still refer to “our books”.
(Speaking of digital books, check out this post if your bank account and QuickBooks aren't matching up)
But what does this even mean? The term harkens back to the day when clerks painstakingly handwrote by candlelight lines and lines of every single financial transaction that ever moved in or out of your business.
(Note: If your bookkeeper STILL hand-writes your expenses and profits in a book….run, don’t walk, RUN to your phone and give us a call!)
But today, books can be stored in a digital cloud, but they still SHOULD contain EVERY SINGLE financial transaction that moves in and out of your business accounts. This isn't just for tax purposes either. Accurate books are a complete game-changer when it comes to cost-saving opportunities and are to your benefit more than anything else.
So, any dollar that goes in or out of your business needs to be put on your books.
(While you're here, don't miss reading this recent post next: What is a Position Contract and Do I Need One?)
If you spent $1.57 at a coffee shop on a business trip, put that on the books! Did you make $157,000 on the sale of some of your business equipment? Put that on the books. If you collected $157 of sales tax on a product sale, put that on the books! Does your business own something that is worth something? Put it on the books.
No matter how big or little, every dollar needs to be accounted for.
Like we mentioned, a big part of this is for accountability to your state and federal agencies for tax and compliance purposes. But the benefits for your own business are endless! You want to be able to see at a glance what your business is worth. How much do you owe? How much do people owe you? And how much are you making and spending each month?
We say the benefits are "endless" because those are the kinds of numbers that empower you to make intelligent business decisions. Ultimately, they drive your company to greater and greater success!
So whether virtual or hard copy, your books are a record of everything that's moving in and out of your accounts.
Now that we have that established, we want to consider the relationship that bookkeeping vs. accounting might have with those books. Both are interacting with the same data but in a much different way. And that's exactly what we cover in part two of this series. We break down the tasks a bookkeeper handles versus what an accountant takes care of.
If you already know it's a bookkeeper that your business needs, click here to see how our bookkeeping services can help you grow your business.
Do you want to learn more about managing your books? Here are three posts to try next:
4 Really Good Tips For Effective Invoicing for Small Businesses
3 Simple Accounting Mistakes That Could Jeopardize Your Business
The Excellent Benefits of Bookkeeping Services: It Makes a Difference
This post was first published in 2013 but it was updated in 2021 just for you.