Do you know the difference between accounting and bookkeeping? When many small businesses open up, the owners sometimes use those terms interchangeably but they do have noticeable differences.

In your small business, you have to keep up with both functions – bookkeeping and accounting. Here are the differences:

1.  Bookkeeping is the process of the record-keeping of all financial transactions of the company. Bookkeepers record the sales, expenses, and cash/bank transactions of the company. Bookkeeping is the act of keeping up with the day-to-day expenses and tracking of your income and expenses.
2. Accounting, on the other hand, is the preparation and tracking, of the complete financial affairs of your company. Accounting also includes the interpretation of the numbers prepared by the bookkeeper to determine the financial health of the firm. It also includes the presentation and financial health and control functions of the company. An accountant will also help you prepare budgets and ready your business for tax preparation.

In many small businesses, a bookkeeper can operate under the supervision of an accountant. In small businesses the accounting functions may be outsourced. In some small businesses, both the bookkeeping and accounting functions are both outsourced.

Regardless of whether you outsource either of those functions, you need to be kept apprised of your business’s financial health. Your accountant should work with you to help you understand the income and expenses your business is faced with.

Contact us for all of your business bookkeeping and accounting needs.