Despite obvious similarities between these two roles, bookkeeping and basic accounting are totally separate jobs in reality.
Similarities between bookkeeping and accounting:
Accountants and bookkeepers work with financial data
They share the common goal of improving your financial health
Their roles sometimes overlap in small businesses due to the advent of bookkeeping software that can compile financial statements
Both require basic accounting knowledge to enter either profession
Both are tax compliant
Differences:
Bookkeeping is basically the first step of accounting. Consider bookkeepers to be the first runners in a track relay. By recording financial transactions, they establish the groundwork for accountants. They keep track of your finances by recording transactions, allowing you to see how much money is flowing in and out of your firm at a glance. You can trust them to keep you on the straight and narrow because they're tax compliant.
The main tasks of bookkeepers are as follows:
Recording income and expenses.
Creating invoices.
Double checking balance in your books.
Tracking your accounts payables and accounts receivables.
Maintaining a general ledger.
After getting the data recorded by the bookkeeper, the accountant will now assess, analyse, and report on the company's financial health using the recorded data.
You wouldn't hire an accountant just to record income and expenses since they provide more specific information that helps you make better business decisions. You'd pay more for a service that a bookkeeper could provide for less money, and you'd be underutilizing the accountant's expertise in the process.
Below are some tasks performed by an accountant:
Preparing financial statements i.e balance sheets, income statements, and cash flow statements.
Analysing general ledger entries.
Providing tax- related advice.
Providing financial advice for your business.
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