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Do You Know the Difference between Bookkeeping and Accounting?

Accounting and bookkeeping are considered very similar sets of services. Bookkeeping is considered a subset of accounting services in business terms. A designated person for the accountant position must be familiar with bookkeeping services. But a bookkeeper does not need to know all the tasks performed by an accountant.

A company based on its size should choose between two types of services to follow a proficient approach to problems related to finances. The following discussion differentiates between bookkeeping and accounting services to help you choose the best professionals for each of them:

Defining the Two Processes

Accounting, also known as financial accounting, is the set of services used to carry out a complex analysis of an organization’s overall financial situation that involves bookkeeping as a small part of it.

Bookkeeping is defined as the set of services that keep accurate records of business transactions so that higher-level management can monitor the inflow and outflow of money. More details!

An Elaborate Vision of Duties

You can learn more about the differences between the two by understanding the tasks performed by an accountant and a bookkeeper. The duties of a bookkeeper focus more on the day-to-day financial situations of business. This involves:

–           Reconciliation of company bank transactions to know or avoid any type of fraud that occurs in the company bank account.

–           Manage the payroll of employees taking into account the government regulations of the region.

–           Maintain records of accounts receivable and accounts payable.

–           Track inventory affected by purchases made and income generated by a company.

–           A bookkeeper must make sure that all business accounts are accurate and up-to-date.

An accountant generally does not do his duties day by day. The following widely classified duties are part of an accountant:

–           An accountant performs the analysis of the financial records and reports prepared by the bookkeeper to help senior management create new decisions for the development and earnings of the business.

–           Taxable income calculation and deductions are the essential tasks for which a business depends on an accountant.

–           Budgeting is another vital activity for which a business house wants the services of an accountant.

–           An accountant works as an advisor to the business during events such as mergers, acquisitions, and all other new company decisions.

What Services Are Necessary?

Small businesses do not make a large volume of bills and invoices and therefore can work well with either kind of service. In fact, an accountant is the most suitable alternative for a small business, since they can perform both kinds of tasks. Hiring a small business bookkeeper may not be of much help in the process such as tax preparation and important decision making.

When it comes to large companies, there is a need for both types of services. It becomes more significant in a large company to decrease the burden on an accountant in order that you can focus more on essential tasks such as financial statement analysis and business advice. Therefore, a bookkeeper should be hired to handle daily procedures such as employee payroll administration and account management.

In several states, a clear distinction is made between the duties of an accountant and a bookkeeper to help companies of various sizes select the right set of services. These states recommend hiring the best services of a Certified Public Accountant (CPA) for accounting purposes. Companies also receive guidelines for learning about the duties of these professionals. For business accounting service, always choosing a certified professional is a good step in the direction of maintaining and establishing the financial stability of the company. Click here for more information:

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