Bookkeeping vs. Accounting: What’s the Difference for a Small Business?
“Bookkeeping” and “accounting” are often used interchangeably, but they aren’t exactly the same thing.
Understanding the difference can help small-business owners know what kind of financial help they need and when they need it.
What Is Bookkeeping?
Bookkeeping focuses on maintaining accurate records of your business’s financial activity.
Depending on the business and scope of services, bookkeeping may include tasks such as:
- Categorizing business transactions
- Recording income and expenses
- Reconciling bank accounts
- Reconciling credit card accounts
- Maintaining organized financial records
- Reviewing transactions for discrepancies
- Producing financial reports
- Maintaining accurate records in QuickBooks Online
Think of bookkeeping as building and maintaining the financial foundation of your business.
If the information going into your accounting system isn’t accurate, the reports coming out of it won’t be reliable either.
What Does an Accountant Do?
Accounting generally involves interpreting, analyzing, and using financial information for higher-level financial and reporting purposes.
Depending on their qualifications and services, accountants may assist businesses with areas such as tax planning, tax preparation, financial analysis, compliance, and other accounting matters.
Some professionals provide both bookkeeping and accounting services, while others specialize in one area.
What About a CPA?
A Certified Public Accountant, or CPA, has met specific education, examination, and licensing requirements.
CPAs may provide services that go beyond routine bookkeeping, including certain tax, audit, assurance, and advisory services.
A bookkeeper and CPA can also work together.
Your bookkeeper maintains organized financial records throughout the year, which can help provide your tax professional with cleaner and more complete information when it’s time to prepare your return.
Why Does Bookkeeping Matter So Much?
Imagine trying to make an important business decision using financial reports containing missing transactions, duplicate expenses, or unreconciled accounts.
The report may look professional, but the information behind it could be wrong.
That’s why consistent bookkeeping matters.
Your books provide the information used to understand what’s happening financially within your business.
Do You Need a Bookkeeper or an Accountant?
The answer may be both.
If you’re struggling to keep QuickBooks updated, your accounts haven’t been reconciled, transactions aren’t properly categorized, or your records are months behind, professional bookkeeping may be the place to start.
If you need tax advice, tax preparation, auditing, legal guidance, or specialized financial advice, you’ll want the appropriate qualified professional for those services.
Build a Better Financial Foundation
Good bookkeeping isn’t just about entering transactions.
It’s about creating organized financial records that allow you and the professionals supporting your business to work with better information.
At Northeastern Oklahoma Bookkeeping LLC, I provide remote bookkeeping services for small businesses using QuickBooks Online.
Whether your books need regular monthly attention or you’ve fallen behind and need help getting organized, we can start by looking at where things stand today.
Schedule a free consultation to discuss your bookkeeping needs and find out whether my services are a good fit for your business.
