![]() Overall, bookkeeping is responsible for the recording of financial transactions, while accounting is responsible for interpreting, classifying, analyzing, reporting and summarizing financial data. Bookkeeping is the recording part of this process in which all financial transactions of the business are entered into a database. Accounting is the process by where a company’s financials are recorded, summarized, analyzed, consulted and reported on. While bookkeeping and accounting are both essential functions, there are some important distinctions between the tasks of a bookkeeper and an accountant. While there are substantial differences between accounting and bookkeeping, both functions work hand in hand to maintain the financial stability of businesses and are crucial for long-term success and growth.There is often a misconception that bookkeeping and accounting are the same thing. If you work with an accountant, you can give them access to your FreeAgent account so you can work on the same set of business books together in real time - no need to send in spreadsheets or hand over a shoebox full of receipts! FreeAgent is Making Tax Digital compatible, allowing you to file your VAT returns directly to HMRC through the software and remain compliant with the new VAT filing rules.Īccounting tasks such as verifying the business’s books, analysing operational costs and assessing profitability are made easier by the reports available in FreeAgent. Bookkeeping tasks such as explaining transactions, recording expenses, producing invoices and running your payroll are greatly helped by the software’s easy-to-use features. An app to help with thatįreeAgent brings all of your complex financial data into one easy-to-use system. They focus on the bigger picture, forecasting future financial performance of businesses. Their input could be hugely valuable if you want to know whether to bring on new staff, what to do about asset management, tax and expenses and identify where savings can be made. They analyse the financial data from your accounts to verify accuracy, assess whether the company is profitable and provide strategic recommendations based on their analysis. If you are keen to have more input and advice when making decisions based on your financial data, this is where an accountant can help.Īccountants bring with them a stronger knowledge of legislation and tax. The reports bookkeepers produce provide valuable financial information that can be used to future-proof your business. Some also produce financial statements and reports, including trial balances and balance sheets, laying the groundwork for analysis. In the case of accountants, they can also make some strategic recommendations for improvement.īookkeepers handle day-to-day financial tasks, such as data entry, recording receipts and invoices, reconciling bank statements and paying suppliers and employees. Both groups of professionals are subject matter experts and can save business owners a tremendous amount of time by gathering data and understanding what it means. Professional accountants and bookkeepers are employed by organisations in the private and public sectors to help them stay on top of their finances. So what do accountants and bookkeepers do? As accounting relates to the interpretation of this information for financial forecasting and to inform business decisions, bookkeeping can be considered part of the accounting process. While both activities involve the handling of financial data, bookkeeping relates to how the data is gathered and stored and can be seen as more administrative. It is sometimes referred to as ‘the language of business’. Defining these termsīookkeeping involves measuring, recording, storing and retrieving financial transactions for organisations.Īccounting relates to a body of financial knowledge and how this is interpreted, summarised and communicated through statements, product reports and income information. ![]() Here’s a quick guide that defines these terms, examines what accountants and bookkeepers do and the benefits these services provide to business owners. ![]() ![]() However, it isn’t always clear what the differences between these activities are. Accounting vs bookkeeping: what’s the difference?Īccounting and bookkeeping are vital functions for small businesses, ensuring that they are financially compliant, healthy and able to grow. ![]()
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