Differences between Bookkeeping and Accounting? Let me clarify for you.
Is there really a difference?
The answer is yes, there’s a big difference between bookkeeping and accounting. Often the terms are used interchangeably because bookkeepers and accountants share a common goal, they actually refer to two different kinds of financial services. Both being very necessary to run a good profitable business.
When we speak about bookkeeping what does this refer to?
Accurate bookkeeping is the cornerstone of a successful business. Bookkeeping needs to be updated regularly and needs to be backed up and stored in a safe place. It is this information that will be handed over to your Chartered Accountant at the end of your financial year when your financials need to be put together and submitted to SARS. It is also this information that will be required if you ever wish to sell your company and get the best price for it. It is important that you are able to retrieve this information easily and at any time when financial decisions need to be made quickly.
The most common business transactions include:
- Purchases
- Sales
- Receipts
- Payments
- Invoices
- Capturing of Bank statements, credit cards and Petty cash.
The most important trait of a Bookkeeper needs to be accuracy as well as consistency. This is vital for good record keeping. Having your records in the right place and updated is also very helpful when audits happen. To be cost effective it is good to have a bookkeeper do the everyday capturing which can then be handed over to an Accountant for the final financials to be drawn up and submission thereof.
What is accounting?
While bookkeeping involves recording your business’ financial transactions, accounting services take things a step further. The accountant analyses and creates the financial statements. They are also able to give valuable Tax advice in how to do things more efficiently together with you and your bookkeeper. A qualified Chartered Accountant is the only person that can legally sign off your yearly financials.
Depending on your specific needs, accounting services can include things like:
- Financial statements
- Financial projections
- Cash flow management ….to name a few.
Which is right for you?
In general, the larger or more complex your business is, the greater the need for both an expert bookkeeper and a certified accountant. Many smaller businesses begin with bookkeeping services, and then add other accounting services as they grow.
Bookkeepers and accountants work in tandem to give you a complete financial picture: Bookkeepers look to the past, while accountants look to your financial present and future. Together, they can provide you with the sound financial information and advice you need to make good decisions for your business.
In the end, the most important thing is that someone with experience and expertise is handling your finances—you can’t afford to just wing it! Unless you’re an accountant yourself (and most business owners aren’t), you shouldn’t try to handle your own books or accounting needs. Not only will it eat up your precious time, but without a sound accounting background it’s easy to get lost amid a sea of paperwork and reports. Ultimately, your business will suffer (not to mention your stress level).
So if you are looking for peace of mind, give us a call.