Accounting And Bookkeeping Services. What Are The Differences?

The difference between accounting and bookkeeping services

As an expert bookkeeping company (if we do say so ourselves), we often get asked what the differences are between accounting and bookkeeping services. You may think that accounting and bookkeeping services go hand in hand. But even though both professions work closely with numbers, there are massive differences between bookkeeping and accounting (even if they are sometimes subtle!). At its core, a bookkeeper will record a company’s day-to-day financial transactions, whereas accountants will perhaps focus more on the bigger picture. The two professions are indeed similar (and often bookkeepers and accountants will work side by side) as these jobs require many of the same skills and attributes.

However, we do need to stress that there are significant differences between the two. Just because you are an excellent bookkeeper it may not mean you as proficient in accountancy and vice versa. In this blog, we will outline the key differences between accounting and bookkeeping services to avoid any confusion you may have!

Bookkeeping

So, let’s jump straight in! What is bookkeeping? Well, bookkeeping is basically recording your information and your transactions so that you can easily monitor your business’s incomings and outgoings. Like brushing your teeth, this most definitely should be done on a regular basis! By doing this you will have a much better idea of the exact financial position of your business, allowing you to make decisions such as necessary filings for your taxes. Important stuff!

A bookkeeper’s typical day will include entering customer and purchase invoices, bank and control account balances, reconciling cash, plus the preparation and filing of your VAT returns. There are lots of other things they might do, but these are the main responsibilities. All of this will be done through your accounting software, like Xero.

Bookkeepers are also responsible for ensuring data is entered correctly into the business’s financial software, reconciling control accounts, as well as compiling double-entry bookkeeping when required. The end result of all of this work will enable you to summarise and present this data, providing up-to-date and accurate financial information about your company.

Finally, a huge reason that your business needs accurate (and timely) bookkeeping is so you have the exact information you need for the business to file the correct financial data to HMRC (as well as other external parties). We hope we don’t have to tell you at this point how important it is to keep HMRC on side!

Accounting

So now we know about the high-octane, adrenaline-filled world of bookkeeping, what about accounting? Well, buckle up your seatbelts and we’ll tell you! Accounting records your financial information but then summarises it in a useful way. Basically giving you what you need data-wise to make crucial business decisions.

A good accountant will be able to tell you the following: How much profit (or loss) your business is making, your current cash flow position, along with the current total value of your company’s assets and liabilities. Another key part of an accountant’s job is analysis. An accountant should actively delve deeper into your financial position and figures to offer you a clearer understanding of potential trends and variances.

An accountant will take the data your bookkeeper has produced (probably straight from your financial accounting software). They may need to adjust the data to reflect the true financial position. Adjustments may have to be made for things like accruals, prepayments and stock, or just for more complex accounting. Once all of this has been done your accountant can present this information in either your management accounts or your end-of-the-year financial statements.

And, breathe!

So, there we are. Congratulations on making it to the end of this blog, you now know the differences between accounting and bookkeeping services! We hope that this has been helpful, and if you have any further questions about bookkeeping then don’t hesitate in contacting 123 Easy Books, your expert local bookkeeping company. Remember, we are big enough to specialise, but small enough to personalise!

For more information on Accounting And Bookkeeping Services. What Are The Differences? talk to 123 Easy Books