What Is the Difference Between Bookkeeping and Accounting?

Bookkeeping encompasses organising and recording financial information, while accounting involves taking the data, summarising it, analysing, consulting and reporting. This blog will outline the differences that exist between accounting and bookkeeping in detail so that you can tell them apart.

Differences between a bookkeeper and accountant

An accountancy firm is tasked with the work of assessing and interpreting the financial data of a particular company and reporting on it. For this reason, it’s worth noting that an accountant has greater skill sets compared to a bookkeeper. A bookkeeper has the primary responsibility of handling the recording of financial transactions of a company. An accountant has to hold a certification or degree in CPA. Moreover, his/her salary is better than that of a bookkeeper. In the real sense, a bookkeeper reports to an accountant.

On the other hand, a bookkeeper does not need to have any formal training. However, a bookkeeper’s job is crucial. The information that a bookkeeper gathers is responsible for acquiring and gathering will always affect the ability of the accountant to interpret the financial information of a company. From this information, we can say that an accountant is tasked with providing recommendations to the company’s owners or management regarding tax issues, expenditure and other financial concerns.

What are the responsibilities of a bookkeeper?

The responsibilities of a bookkeeper usually vary depending on the type of the company. Below are some of the responsibilities that a bookkeeper is charged with:

• Recommend, implement and monitor all the bookkeeping policies and procedures. 
• Come up with credit and debit accounts and this includes assigning expense categories. 
• Recommend, implement and manage accounting software that will be essential for developing a single entry system or double-entry accounting system. 
• Handling banking activities such as new deposits 
• Feed expenses and income into the necessary software include non-digital payment methods such as checks and cash. 
• Making sure that the accounts balance and verifying the accuracy of data. 
• Training staff on the importance of using software, such as the procedure of entering expenses. 
• Assisting with audits 
• Ensuring that he or she adheres to the best practice of accounting and government regulations. 
• Maintaining records, creating a backup and archiving necessary data. 
• helping the accountant prepare financial statements, but it can sometimes depend on what type of statements are needed. 
• Flag any kind of discrepancies 
• Ensuring that recorded expenses align with the company’s policies and managing any approvals. 

Among other duties of a bookkeeper, he also has to be confidential regarding the information he processes because he will be accessing sensitive information like payroll salaries.

What are the responsibilities of an accountant?

The responsibilities of an accountant can be divided into four categories;

1. Financial reports

An accountant is tasked with generating statements and standard business reports needed by businesses as well as HMRC.

2. Regulatory compliance

Accountants need to be updated on government regulations and ensure that the company adheres to the industry standards.

3. Data management

Accountants oversee how data is stored, updated and managed. For instance, bookkeepers can recommend software that can be useful, such as that for a single entry system of accounting. However, the accountant has to approve this.

4. Financial analysis and consultation

An accountant has to assess data properly and advise the management.

Summary of the duties of bookkeepers and accountants

The duties of bookkeepers and accountants vary from one company to another. However, besides the duties of these two professionals being confusing, there is a big difference. Even though bookkeepers usually face a big challenge, their work is simple provided they are using digital software. This is one thing that cant be avoided when the time for making tax digital deadline comes. Some software is available to help in the easy management of books and help you avoid the hassle of a lot of paperwork.

Can bookkeepers be known as accountants?

Typically, an accountant holds a degree and usually has relevant work experience. However, for becoming an accountant, no formal certification is involved. Bookkeepers can call themselves accountants, but it’s not advisable to do so unless they have an education in that field or significant work experience that involved various facets of accounting.

For a bookkeeper, he cannot refer to himself as an accountant until he achieves the designation. To be a certified accountant, a bookkeeper will have to pursue the necessary education in that field, have the necessary work requirements, and pass the exams.

Bookkeeper vs accountant summary

Besides having some overlaps in their responsibilities and roles, bookkeeping and accounting are two different functions. We hope that this post helped shed some light on the differences between the two. Once you have known the difference between the two, you can now decide what you want to do next, if it’s your wish to manage your finances or appoint someone such as a financial professional. You can also opt to use accounting software. However, this decision is personal and it will depend on your company’s needs and objectives.