What’s the Difference Between Bookkeeping and Accounting Services?

By imarketing

Many people use the terms bookkeeping and accounting interchangeably, and both are equally important in terms of running a business organization. 

It’s easy to understand why both appear to perform the same function, since they are interrelated and require many of the same skill sets. For example, both require knowledge of the dual entry accounting system, and both deal with financial transactions.

But there are some important differences to understand, especially when searching for a service provider. 

The Basics

In very general terms, bookkeepers are responsible for keeping an accurate record of all transactions in an organization, while accountants (sometimes referred to as Controllers or CFOs) are responsible for interpreting, analyzing and reporting the financial data. 

In some cases—usually at a smaller business—one individual can perform both functions. In fact, with the advent of more sophisticated accounting software, many bookkeepers are taking on roles more traditionally associated with accountants.

There are many ways bookkeeping and accounting services are different, and here we’ll cover just some of the ways they are distinct from one another.

Boots-on-the-Ground vs. 30,000-Foot Overview

As a rule, bookkeepers help business owners with the details and the process of keeping the company’s books on a day-to-day basis. Accountants typically provide a broader perspective and deal with more technical transactions.

For example, a bookkeeper manages the day-to-day financial transactions of a business, and that means recording transactions in accounting software (with QuickBooks being the most popular among small businesses), updating financial spreadsheets, processing payroll, and reconciling bank and credit card statements to cash. 

An accountant may supervise the handling of the company’s financial operations and can interpret reports to recommend strategies for growth and the overall health of the organization. 

Year-End

At the end of the year, bookkeepers are responsible for things like preparing 1099-MISC forms for contractors, assisting clients with preparing W-2s and verifying that quarterly payroll returns tie to W-2s. 

An accountant will review the general ledger and make any necessary adjustments, usually through journal entries, before closing the books and sending financial statements and other reports to the CPA for year end tax prep.  

The Bottom Line

If a business owner has a complete picture of their finances, they’re better able to make the best, most strategic decisions to help them grow and be more profitable. The bookkeeper and accountant serve different purposes, but they work hand in hand to deliver the most current and accurate information about the organization to decision makers. 

Most business owners find they need help with their bookkeeping and accounting functions when it becomes too burdensome to do it themselves. At that point, it’s generally a better leverage of time to call in the skilled experts so they can avoid costly mistakes and get back to doing what they do best: running their business. 

Do you need bookkeeping or Controller/CFO services for your business? 

The experts at Steiner Business Solutions can provide a free consultation to discuss your needs and provide the right financial services for your business. Let’s talk!