This document explains the differences between bookkeeping and accounting, highlighting that bookkeeping focuses on recording transactions while accounting analyzes those transactions for insights. Bookkeepers maintain records and handle daily financial transactions, whereas accountants interpret that data for decision-making and financial reporting, requiring a higher level of education and licensing. Both roles are essential for a business's financial health, with distinct responsibilities and required skills.

1. What is The
Difference Between
Bookkeeping and
Accounting?

2. Bookkeeping involves recording each transaction
for a business while accounting is more about
looking at all those transactions to find trends
that can be used to help a company. More
specifically, bookkeeping is done with paper
records, while accounting requires software
programs.

3. Bookkeepers record each transaction in a
company’s financial. Accounting is more
subjective, giving you insights into your
business’s financial health based on
bookkeeping information.

4. Accounting and bookkeeping are two related
fields with some differences in functionalities.
Understanding these differences is important
because the roles of accountants and
bookkeepers differ based on their respective
skill sets, expertise, knowledge base or
background experiences (e.g., accounting vs
finance). In this guide, we will explain the
functional differences between accounting and
bookkeeping. We will also discuss the distinct
roles of a bookkeeper versus an accountant.

5. The function of bookkeeping
The role of a bookkeeper is to record and detail
the business transactions that affect any aspect
of your business (e.g., revenue, expenses,
payroll, inventory). You can think of a
bookkeeper as someone who records the basic
transactions happening in a business — not
much beyond recording them.

6. Bookkeepers typically handle routine day-to-day
ledger maintenance. The general ledger is a
basic document where a bookkeeper records
the amounts from sale and expense receipts.
This is referred to as posting. The general ledger
is a summarised list of all amounts.

7. The function of accounting
Accounting is a high-level process that uses
financial data compiled by a bookkeeper or
business owner to produce financial models,
reports, and analyses. The main goal of
accounting is to provide useful information to
managers, investors, tax authorities, customers,
suppliers, employees etc.

8. Accountants can also offer advice on business
decisions based on analyses derived from
financial data in addition to providing regulatory
compliance for businesses (e.g., accounts are
retained for a certain number of years). A
financial statement serves as the basis for
making business decisions and helps monitor
performance.

9. Accountants gather, organise, and summarise
transactions, then draw conclusions based on
that information. Accountants analyse past
performances to make better business decisions
in the future. They compare their findings with
past performance and Analysing costs of
operations and Completing income tax returns.

10. The roles: bookkeeper vs accountant
Bookkeepers record the amounts from sales and
expense receipts. They keep track of financial
transactions in journals, ledgers, and computer
programs. Accountants combine information
from several sources to draw conclusions about
a company's performance.

11. They collect relevant data that is then analysed
before drawing conclusions or giving advice.
Typically, bookkeepers are not required to have
any formal education. To be successful in their
work, bookkeepers need to be sticklers for
accuracy, and knowledgeable about key financial
topics. Accountants, on the other hand, need a
bachelor’s degree in accounting or finance from
an accredited university. Additionally, they must
get a professional license from their state to
operate as accountants.

12. Although your business may have both a
bookkeeper and an accountant on staff, their job
duties are quite different.
Here are the major pointers.

13. Bookkeeper
• Recording and categorizing financial
transactions
• Posting debits and credits
• Producing and sending invoices
• Maintaining and balancing subsidiaries,
general ledgers, and historical accounts
• Completing payroll
• Record keeping

14. Accountant
• Preparing adjusting entries
• Preparing financial statements
• Completing income tax returns
• Financial analysis and strategy
• Tax strategy and tax planning
• Financial forecasting

15. iKeep Bookkeeping & Hall Chadwick
Organised financial records and perfectly
balanced finances produced by the bookkeeper,
coupled with smart financial strategy and
accurate tax filing by the accountant, contribute
directly to the long-term success of every
business. iKeep bookkeeping with its partner
firm Hall Chadwick, offers services ranging from
bookkeeping, accounting, compliance solutions,
to financial planning and strategy. Find out more
at www.iKeep.com.au