There is a common misconception that bookkeeping and accounting are exactly the same. In reality, there are meaningful differences between these financial services. Sensible Services in Hammond LA is proud to provide both accounting services and bookkeeping services. We are your one-stop for business needs of all different varieties. Below, we provide a closer look at the nuanced differences between accounting and bookkeeping.
The Real Differences Between Accounting and Bookkeeping
Accounting and bookkeeping differ from one another in more than merely name alone. Though accountants and bookkeepers have similar goals, they provide different types of support for businesses. Accounting is comparably subjective, providing insights for businesses. However, accountants’ insight is based on information stemming from bookkeeping. Bookkeeping is comparably administrative and transaction-oriented, focusing primarily on the recording, organization and tabulating of financial transactions. Though these professionals sometimes perform the same work, bookkeepers’ primary task is to record financial transactions and maintain financial organization. Alternatively, accountants provide in-depth analysis, consultation and tax guidance.
The Purpose of Bookkeepers Vs. The Purpose of Accountants
Bookkeepers record transactions in a uniform manner, laying the foundation to build a business that achieves financial success. Bookkeeping services consist of payroll, maintaining/balancing ledgers and accounts, generating invoices and posting payments/deposits. Working on general ledgers is one of the primary bookkeeping components. This ledger keeps track of receipts pertaining to sales and expenses. Such tracking is known as posting.
Alternatively, the function of accounting is to compile data and generate financial models with the information. While bookkeeping is mainly transactional, accounting is more subjective and analysis-oriented. Accountants process income taxes, analyze the cost of doing business, generate financial statements, help business owners/managers make prudent financial decisions, adjust entries and more. The accounting process generates reports that combine important financial indicators with one another, enhancing the understanding of the business’s financial position in terms of cash flow and profitability.
In summary, accounting serves the purpose of transforming the information entered into a ledger into statements that shine the spotlight on the overarching picture of the enterprise as well as the company’s progression, regression or stagnation. Ask any business owner about the importance of accountants and you will be inundated with praise pertaining to accountants’ guidance in terms of strategic tax planning, tax filing, financial forecasting and more.
What About the Credentials for Bookkeeping Versus Accounting?
While accountants typically have at least an undergraduate accounting degree in accounting or finance, bookkeepers do not always have a formal education. However, this is not to say bookkeepers are undeserving of work as they tend to be detail-oriented individuals who are committed to providing highly accurate information, valuable insight and knowledge pertaining to financial topics. Accountants often oversee the work performed by bookkeepers or the books of the business owner. Therefore, it is inappropriate for bookkeepers to refer to themselves as accountants.
Bookkeepers are ineligible to obtain professional certifications related to accounting as these individuals do not have a formal undergraduate education. Alternatively, accountants are eligible for such professional certifications as they have the education and experience necessary to become a Certified Public Accountant or CPA for short. An accountant who would like to become a CPA is required to pass the Uniform Certified Public Accountant exam and also have sufficient experience working as a professional accountant.
Lean on Sensible Services for Accounting and Bookkeeping Services
We are proud to provide top-notch bookkeeping and accounting services. Our accounting and tax services are performed by an enrolled agent. This term refers to a qualified tax professional licensed by the Internal Revenue Service at the federal level. Though few know it, the status of enrolled agent is the top credential provided by the IRS. Lean on us for financial consulting, business consulting, tax services, payroll and more and you will be more than pleased with the results. We sweat all the small stuff of financials on your behalf so you can focus on what you do best. Reach out to us today to learn more about our services and schedule an initial consultation. You can contact us or by dialing (985) 222-2088 or by filling out our contact form.
