Julian Drago
August 29, 2023
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Bookkeeping and accounting are two closely related terms that are often used interchangeably. However, there are some key differences between the two.
As a business leader, you should have a good idea of these differences so that you can hire proper bookkeeping and accounting services when managing your company in the USA.
which professionals best suit the needs of your company. As such, it's important to know whether you need a bookkeeper or an accountant to keep track of your affairs. That may be tough since the roles and responsibilities may intertwine. So here are a few tips to help you decide.
So, in this blog you are going to learn:
There are 3 key differences between bookkeeping and accounting:
Bookkeeping is the process of recording financial transactions. Accounting is the process of summarizing, analyzing, and interpreting financial data.
In other words, bookkeeping could be defined as a direct record of all the purchases and sales your business makes, while accounting would be a subjective look at what that data means to your business.
The purpose of Bookkeeping is to keep accurate records of a company's financial activities. So, it involves tasks such as:
The purpose of Accounting is to help businesses make financial decisions focusing on the big picture. Accounting typically consists of:
Bookkeepers and accountants sometimes do the same work, but have different skill sets. In general, a bookkeeper's role is to record transactions and keep you financially organized, while accountants provide consultation, analysis, and are more qualified to advise on tax matters.
A big responsibility that sets accountants apart from bookkeepers is that accountants have to be extremely knowledgeable and aware of financial decisions that will affect the company.
There are no formal educational requirements to become a bookkeeper, but they must be knowledgeable about financial topics and accounting terms and strive for accuracy. Generally, an accountant or owner oversees a bookkeeper’s work. A bookkeeper is not an accountant, nor should they be considered an accountant.
A bachelor's degree in accounting and passing the CPA exam are required to become a certified public accountant.
And, what about tax preparers?
Accountants help with tax preparation and planning, but tax preparers help with filing and filling out general tax forms. Bookkeepers help record the files and transactions that occur, but the tax preparer is responsible for helping clients fill out the paperwork and submit it to the Internal Revenue Service.
Tax preparers may also become Registered Agents, a state-authorized person who helps businesses stay informed of their legal requirements.
Tax preparers can help complete and file tax forms, but they must have a thorough understanding of state and federal tax laws, as well as how business expenses can affect the amount of taxes businesses pay.
Tax preparers also handle confidential and personal information provided by clients, such as home addresses, phone numbers, and Social Security numbers. Confidentiality is an important part of a tax preparer's job. Tax preparers must be able to predict future business activity and whether certain business decisions may result in tax deductions or credits in future tax payments.
The type of financial services you need depends on the size and complexity of your business. If you are a small business, you may be able to get by with just a bookkeeper. However, if you are a larger business or need help with financial planning, you will need an accountant.
Both accounting and bookkeeping services can provide valuable insight into your business's financial situation, help you make better decisions about cash flow, and stay prepared when it comes to tax liabilities.
You may want to consider hiring a bookkeeper:
Choose an accountant:
When looking for virtual bookkeeping and accounting services, it is important to find someone who is qualified and experienced.
US companies are not required to have a bookkeeping or accounting team, although it is helpful for them to be able to focus on growing the business while experts take care of the numbers.
There are 3 key differences between bookkeeping and accounting:
Bookkeeping is the process of recording financial transactions. Accounting is the process of summarizing, analyzing, and interpreting financial data.
In other words, bookkeeping could be defined as a direct record of all the purchases and sales your business makes, while accounting would be a subjective look at what that data means to your business.
The purpose of Bookkeeping is to keep accurate records of a company's financial activities. So, it involves tasks such as:
The purpose of Accounting is to help businesses make financial decisions focusing on the big picture. Accounting typically consists of:
Bookkeepers and accountants sometimes do the same work, but have different skill sets. In general, a bookkeeper's role is to record transactions and keep you financially organized, while accountants provide consultation, analysis, and are more qualified to advise on tax matters.
A big responsibility that sets accountants apart from bookkeepers is that accountants have to be extremely knowledgeable and aware of financial decisions that will affect the company.
There are no formal educational requirements to become a bookkeeper, but they must be knowledgeable about financial topics and accounting terms and strive for accuracy. Generally, an accountant or owner oversees a bookkeeper’s work. A bookkeeper is not an accountant, nor should they be considered an accountant.
A bachelor's degree in accounting and passing the CPA exam are required to become a certified public accountant.
And, what about tax preparers?
Accountants help with tax preparation and planning, but tax preparers help with filing and filling out general tax forms. Bookkeepers help record the files and transactions that occur, but the tax preparer is responsible for helping clients fill out the paperwork and submit it to the Internal Revenue Service.
Tax preparers may also become Registered Agents, a state-authorized person who helps businesses stay informed of their legal requirements.
Tax preparers can help complete and file tax forms, but they must have a thorough understanding of state and federal tax laws, as well as how business expenses can affect the amount of taxes businesses pay.
Tax preparers also handle confidential and personal information provided by clients, such as home addresses, phone numbers, and Social Security numbers. Confidentiality is an important part of a tax preparer's job. Tax preparers must be able to predict future business activity and whether certain business decisions may result in tax deductions or credits in future tax payments.
The type of financial services you need depends on the size and complexity of your business. If you are a small business, you may be able to get by with just a bookkeeper. However, if you are a larger business or need help with financial planning, you will need an accountant.
Both accounting and bookkeeping services can provide valuable insight into your business's financial situation, help you make better decisions about cash flow, and stay prepared when it comes to tax liabilities.
You may want to consider hiring a bookkeeper:
Choose an accountant:
When looking for virtual bookkeeping and accounting services, it is important to find someone who is qualified and experienced.
US companies are not required to have a bookkeeping or accounting team, although it is helpful for them to be able to focus on growing the business while experts take care of the numbers.
