When most people think about bookkeepers and accountants, they would find it difficult to outline the differences between each. While accountant’s and bookkeeper’s share common objectives, they assist your business in different stages of the financial sequence.

In this guide, we will detail the functional differences between bookkeeping and accounting alongside the variations between the roles of them both.

The Function of Bookkeeping

Bookkeeping is the practice of recording daily transactions in a coherent way and is a key element to building a financially successful business.

Bookkeeping is comprised off:

Maintaining a general ledger is one of the key components of bookkeeping. The general ledger is a basic file whereby a bookkeeper records the amounts from expense receipts and sales. This is referred to posting and the more sales achieved the more often the ledger is posted. A ledger can be designed on a sheet of lined paper, a computer spreadsheet or with specialized software. The difficulty of a bookkeeping system often depends on the number of transactions that are completed monthly, weekly or daily and the size of the business.

All purchases sales made by the company need to be listed in a ledger, and certain details need supporting documents. Business transactions that require supporting documents is laid out by the HMRC website.

The Function of Accounting

Accounting is a high-level process that uses financial data collected by a bookkeeper or company owner, and produces financial frameworks using that information. Bookkeeping is largely transactional whereas the process of accounting is more personalized.

Accounting is comprised of:

The result is an awareness of actual profitability and a better understanding of cash flow in the company. Accounting turns the details from the ledger into statements that inform the business of the bigger picture, and the path the business is progressing on. Company owners will usually look to accountants for support with tax filing, financial forecasting, and strategic tax planning.

The Accountants role vs the Bookkeepers role

Accountants and bookkeepers sometimes do the same work. However, in general an accountant provides consultations, analysis and are more qualified to advise on tax matters, while a bookkeeper’s role is to record transactions and keep you financially organised.

Accountants credentials

To hold the title of an accountant, an individual typically must have a bachelor’s degree in accountancy. If an individual does not have a specific degree in accounting a finance degree can be an appropriate substitute.

Accountants are also likely to acquire additional professional certificates, for example accountants with education and experience can attain the title of a certified public accountant (CPA), one of the accepted types of accounting designations. To acquire this title an accountant must pass  the uniform certified public accountant exam and have a wide range of experience as a professional accountant.

Bookkeepers credentials

Generally, bookkeepers do not require any formal education so they cannot call themselves an accountant. However, here at Adkin Bookkeeping Consultants we have a range of industry qualifications and are accredited Xero and QuickBooks partners.

Bookkeeping vs Accounting summary

Accurate balanced finances and organised financial records presented by a bookkeeper, coupled with precise tax filing and a smart financial strategy by the accountant, are exactly what every business needs for long term success. Sometimes businessowners choose to hire professionals while others opt to manage their own. Whether it is time or money you choose to invest into your business financials, both will support and advance your company’s growth.

If you would be interested in finding out about our business support and bookkeeping services, please get in touch with us today.