What’s the difference between bookkeeping and accounting? For most people, they mean the same thing — the experts responsible for a company’s finances. Traditionally, though, bookkeepers and accountants have different duties and skills. Let’s take a look at those differences.
Bookkeepers handle the day-to-day recording and implementation of financial transactions. Depending on your type of business, their tasks may include:
• Record sales
• Accounts receivable — send invoices and track customers’ payments
• Accounts payable — verify, record and pay invoices from the company’s suppliers
• Pay overhead expenses — rent, utilities, etc.
• Pay debt installments — credit cards, business loans
• Reconcile bank statements
• Track inventory to prevent too much or too little on hand
• Prepare payroll
• Submit government reports — employee tax, sales tax, etc.
• Record capital expenditures such as buying equipment
• Record asset depreciation
No special education or qualifications are necessary for these basic data entry tasks; with the right software, anyone can do it. However, you may want to bring in a professional bookkeeper for the following scenarios:
• Implement software tools to improve workflow
• Train employees to use bookkeeping software correctly
• Find and resolve mistakes in the books
• Get you caught up if you’re behind in your bookkeeping
• Set up a tax recording system
These professionals have the title of Certified Public Accountant (CPA) and offer a higher level of financial analysis. They interpret the data recorded by the bookkeeper to make business decisions. Their services include:
• Prepare financial statements
• Identify red flags and growth opportunities
• Prepare and file taxes
• Plan capital purchases and other investments
• Strategize for scaling the business
The New Joint Task Force
So the answer to this article’s headline — which one do you need — is that you need both. The good news is that now you can have both in one convenient, affordable package.
As we stated above, there are traditional distinctions between accountants and bookkeepers. However, the industry is now moving toward merging those two roles into one service.
Thanks to software advances, basic data entry is to a large extent automated, eliminating human labor (and error). As a result, the bookkeeper has fewer functions, while the accountant has a greater capability for business analysis. What’s more, the latest cloud software makes it easy for business owners to stay in the loop, with online access to their financial reports at any time.
Xendoo is at the forefront of this evolution with state-of-the-art software that streamlines processes and keeps our rates reasonable for small businesses. Our flat monthly fees — which include both bookkeeping and accounting services — cost less than half what a by-the-hour accountant typically charges.