Bookkeeping and accounting are not just government regulations that must be adhered to, they are also the backbone of your business. Accounting services and operations perform the cash flow, budget, revenue, and profit-loss analysis; thereby providing sustainability to your business.
However, sooner or later most business owners start facing problems with these activities. You may have realized that your account books are becoming more complicated and time-consuming or that your financial analysis and planning is becoming more difficult or not yielding the desired results. If you have started recognizing these issues, you may also have reached the conclusion that you need expert help with these operations.
However, realization and resolution are two different things. Despite having realized what the issues are, many business owners find it difficult to decide and choose the services that best resolve their problems.
Bookkeeping is a tedious job and accounting a specialized one. Both these operations sound similar and may lead to some confusion. Therefore, what decision-makers often get stuck on is making a choice between bookkeeping vs accounting services. The key to resolving this issue is to understand the difference between the two operations and this is exactly what we have done for you.
8 Differences between Bookkeeping and Accounting Services
We have listed 8 key differences between bookkeeping vs accounting services that will help you to analyze and understand the concept, deliverables, benefits, utility, talent requirements, and cost of these operations.
1. Bookkeeping vs Accounting – Concept, and Scope
Bookkeeping deals with classifying, recording, and quantifying financial transactions of your business.
It is a segment of the larger accounting system that businesses require.
Accounting refers to the process of summarizing, interpreting, and communicating insights based on financial data. Accounting services have a larger scope and perspective of which bookkeeping is a crucial part.
2. Bookkeeping vs Accounting – Operations, and Services
- Recording and classification of all financial transactions
- Debit and credit account maintenance
- Receipt verification and invoice management
- Managing bank deposits and purchases
- Subsidiaries and historical accounts management
- General record-keeping
- Payroll services
- Record and maintain adjusting journal entries
- Drafting financial statements
- Analysis of bookkeeping and business data from other sources
- Formulating and implementing a financial strategy
- Tax planning and strategy
- Filing income tax returns
- Financial forecasting
3. Bookkeeping vs Accounting – Output
Business Ledgers (single entry and double entry) including bookkeeping entries for balance sheet and income statement transactions.
Financial statements include a balance sheet, income sheet, cash flow statement, and statement of changes in equity.
4. Bookkeeping vs Accounting – Benefits
- Saves time on a day to day basis and helps in strengthening focus on core operations
- Keeps business and paperwork more organized and updated
- Maintains compliance with all legal requirements
- The timely and professional output of financial transactions
- The output generated helps the management in the immediate decision-making process
- Saves time in terms of financial decision making
- Expert strategists to help with business development and growth
- Better tools and processes to produce workable business intelligence output
- Financial performance analysis gives a clearer picture of where your business is at present and where it should be in the future
- The output generated plays a significant role in making critical business decisions that have both short-term and long-term effects on your business
5. Bookkeeping vs Accounting – Operational Frequency
Bookkeeping is a hands-on administrative task.
It is advisable that your bookkeeper records all transactions on a daily basis and keeps you informed on the ongoing performance of your business.
Accounting services may not be required daily and can be taken on a periodic basis depending on your need.
A financial statement which is the primary output of accounting is a document that must be produced annually.
6. Bookkeeping vs Accounting – Qualification Requirement
Bookkeeping is a clerical job that does not require any specialized skill set.
Financial Accountant is a specialized job that requires knowledge of accounting skills, policies, and practices.
Accountants and financial advisors have specialized degrees and certifications for the same.
7. Bookkeeping vs Accounting – Qualities and Skills
- Sharpness in understanding business transactions
- Accuracy in recording data
- Basic knowledge of financial topics
- Efficient communication skills
- Additionally, you can also look for experts on QuickBooks and bookkeepers who are well versed with HMRC, ATO, and IRS codes
- Accounting Services have a wide scope in business and there are multiple activities that are performed under it. You may have to look for specific skill sets if you’re looking for specialized activities.
- Depending on your need you may choose to hire financial paraplanners, controllers/CFO, analysts, and managers
- Financial experts and accountants must have specialized certifications like CPA, CFA, ACCA, CIMA, etc. to provide the corresponding service
8. Bookkeeping vs Accounting – Cost Evaluation
Bookkeeping is considerably less costly as compared to other accounting services as it requires very little skill. You may choose to keep an in-house bookkeeper or an offshore bookkeeping service.
However, depending on the labor regulations of your country it might be costly to hire in-house. Therefore, it is important to evaluate your options before you make a choice.
Opting for offshore or even better outsourcing bookkeeping services to India and other such economies would be a cheaper and better option.
Accounting services are costlier in comparison to bookkeeping as it requires more specialized expertise.
The best way to save money on accounting is by outsourcing these services. Offshore accounting services provide options for you to curate your team according to your requirements. It is always better to pay for what you really need rather than a full-fledged in-house accounting division consuming a huge chunk of your business budget.
We hope that by now you understand the difference between bookkeeping and accounting services. However, you may have also realized how correlated the two operations are. Therefore, in our opinion, it is better to think in terms of bookkeeping and accounting services rather than bookkeeping vs accounting services. Your business would require the organization and the specializations of both in the long run. Thus, it is always better to move forward with a plan for both.
In this regard, it is better to find offshore bookkeeping services which also offer accounting services. These businesses allow you to mix and match your team and cater to your needs as per your personalized business requirements. As mentioned above, this makes them considerably cheaper. However, if you’re looking for the most efficient and the cheapest option, you can always go for outsourcing bookkeeping services to India. They possess the largest talent pool and faster business response time.
Once you have resolved your confusion on bookkeeping vs accounting, you should start by hiring offshore bookkeeping services and move further along to other accounting services as and when you need them.
Business is all about time, money, and vision, so hurry along now and make this decision.