Accounting vs bookkeeping: What’s the difference?

You may also be an ideal bookkeeping candidate if you want a good job with a respectable wage and decent security but may not be looking for a long-term career. Bookkeeping offers much lower barriers to entry, and the competition you face in the job search is less fierce. For a long-term career, accounting offers much more upward mobility and income potential. The education required to be competitive in the field is greater, but the payoff down the road can be considerably higher.

In today’s post, we’ll explain the differences between bookkeeping and accounting. While these two terms are often used interchangeably, they refer to two vastly distinct functions and roles. Many business owners who aren’t sure which service to choose start with bookkeeper records, and then add on accounting services as their business grows. Further, it encompasses recording economic events that result in the transfer of money or money’s worth. Bookkeeping is all about identifying financial transactions and events and then keeping a record of these transactions.

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The qualifications for becoming a bookkeeper and an accountant can vary, but there are some general trends and common requirements for each role as summarized below. Bookkeeping forms the foundation of all the accounting activities that come after it. Reports and analyses are only as accurate as the raw data that goes into them. Precise bookkeeping is crucial to both legal compliance and strategic decision-making. Certified bookkeepers will also possess the skills and knowledge they need to manage your books effectively.

Some business owners learn to manage their finances on their own, while others opt to hire a professional so that they can focus on the parts of their business that they really love. Whichever option you choose, accounting vs bookkeeping investing—whether it be time or money—into your business financials will only help your business grow. More detailed definitions can be found in accounting textbooks or from an accounting professional.

Bookkeeping vs. Accounting: What’s The Difference?

While there are certain similarities and overlaps between the two, there are distinctions that set these two roles apart. Bookkeepers don’t necessarily need higher education in order to work in their field while accountants can be more specialized in their training. Because bookkeepers tend to work for smaller companies, they may not be paid as much as accountants. Knowing the differences between the two can help people find their niche in the industry and can give guidance to companies on who to hire for their needs. With bookkeepers, there are a lot of minutiae involved, and keen attention to detail is paramount. Accountants, on the other hand, tend to use the bookkeeper’s inputs to create financial statements and periodically review and analyze the financial information recorded by bookkeepers.