Published on October 26th, 2022.

In accounting, you’ve probably heard of the term bookkeeping. This term is often used interchangeably with accounting; however, the two practices have a subtle distinction between them. So, what is bookkeeping? What is the difference between bookkeeping and accounting?

Bookkeeping vs. Accounting

To put simply, bookkeeping is the practice of recording, organizing, and managing the day-to-day financial data and transactions of a firm. Bookkeepers often deal with journal entries and bank reconciliations, and they must be detail oriented to catch mistakes in invoices and statements. On the other hand, accounting is focused on the bigger picture of a company’s financial transactions. For instance, accountants typically focus on the analytics by analyzing, interpreting and summarizing financial data to ultimately draw significant and broader conclusions. Thus, accountants must equally be detail oriented and have strong logical thinking and problem-solving skills to be capable of pulling such analytics.

Despite the subtle distinction between the two practices, both accountants and bookkeepers often work together. In fact, accountants often use the work of bookkeepers to create financial statements and analyze financial information. Additionally, both the bookkeeping and accounting practice require similar skills and knowledge, but many aspiring accountants start their career as bookkeepers because of the lower barriers to entry. Some shared skills between bookkeepers and accountants include keen attention to detail, good communication, problem-solving and mathematics skills, and proficiency in computer literacy as many uses computerized accounting software for the job.

Bookkeeper vs. Accountant Responsibilities

Bookkeeper:

• Recording journal entries
• Conducting bank reconciliations
• Organizing receipts and invoices
• Managing and processing payroll
• Producing financial statements

Accountant:

• Reviewing financial statements
• Adjusting journal entries
• Preparing tax returns
• Conducting routine audits
• Performing account and financial statements analysis

The Importance of Bookkeeping

Bookkeeping done properly provides firms with an accurate measurement of their financial performance and this allows them to make decisions about their finances. Unfortunately, many new small businesses overlook the need for a bookkeeper to manage their finances. Such disregard of the bookkeeping practice can result in tax errors and ultimately penalty notices from the Canadian Revenue Agency (CRA).

If you need a bookkeeper or an accountant to manage your personal or business finances, Globe Accountants and Financial Services Inc. is here to provide all your accounting services needs from personal and corporate taxes, not-for-profit taxes, auditing, and payroll services.

Becoming a Bookkeeper or Accountant

Now that you’ve gained a better understanding of both the bookkeeping and accounting practice, which do you prefer as a profession? If you’re thinking of becoming either of them, Globe Accountants & Financial Services Inc. is offering franchise opportunities to anyone that is interested in starting their own accounting services business. Our franchise will provide you with all the knowledge and skill sets needed to become proficient in both bookkeeping and accounting. For more information about our franchise opportunities, check out the franchise tab on our website!

Sources:

Bookkeeping vs. Accounting: What's the Difference?

The Differences between a Bookkeeper and an Accountant: A Review

What is Bookkeeping?