Difference Between Accounting and Bookkeeping: 2022 Free Guide

by | Jul 21, 2022

Accounting and bookkeeping experts are essential to the success of your company. Even though the terms are frequently used interchangeably, there are significant differences in the functions accountants and bookkeepers play in managing and utilizing your financial data.

As an entrepreneur, your primary concern is keeping the financials of your business in order. A well-managed firm is essential to operating smoothly and profitably. Moreover, Yogi & Associates can help you manage your books and tax information. As we provide the finest bookkeeping services in Mississauga. So, get in touch with us!

Here’s a summary of how using expert bookkeeping and accounting services can enhance your company’s operations while freeing you to concentrate on your strengths. Let’s give it a read!

1. Definition of Bookkeeping and Accounting

As the names of these two terms imply, bookkeepers “keep” or maintain your firm’s financial books and records. While accountants “account” for – or analyze and explain – what is in them.

Therefore, bookkeepers and accountants collaborate to ensure that your company’s finances are well-organized and accurate. And that these finances are being used to improve your company’s performance.

2. Difference between Accounting and Bookkeeping:

The following table will explain the difference between accounting and bookkeeping:

 

Parameters Bookkeeping Accounting
Purpose Bookkeeping involves keeping records of how money flows through an organization. Accountants provide more detailed information about revenue streams and profitability ratios. 
Creating the financial statements Bookkeepers sometimes prepare financial statements, which are reports of a company’s financial condition and performance.

Preparing and reviewing the financial reports and the final books of account is the primary duty of an accountant.

Skills Required A bookkeeper can multitask, make quick decisions, and deal with unexpected events quickly and efficiently. He/she understands complex financial statements. An accountant has strong logic skills, critically analyzes problems, and makes sound decisions based on the facts.
Costs
  •  Per-hour charges are between $25-$90.
  •  Startup Business – $100 to $400 per month.
  • Small Business – $400 to $600 per month.
  • Per-hour charges: $150- $400+
  • Compilation engagement and corporate tax return $1,800 – $4,000
  • Audit engagement:  $4,000+

3. Why Do You Need a Bookkeeper for Your Company?

The ability of any firm to prosper and grow depends on maintaining a well-organized system of financial records. Moreover, keeping track of your company’s development is simpler if your bookkeeping is well-structured.

The primary duties of a bookkeeper are to report and record financial statements, which form the basis for more accurate accounting research. In addition, this research permits entrepreneurs. This study enables business leaders to make more significant choices regarding their company’s pathway.

1. When do you need to hire a Bookkeeper?

Almost every business should have proper bookkeeping procedures. It facilitates the recording of all financial transactions and the creation of tax returns and other financial reports. Therefore, you must determine the kind of bookkeeping services your company needs before employing a bookkeeper.

Making good judgements when one has complete data, facts & knowledge is not leadership, it’s bookkeeping.” – Dee Hock

2. What are the Duties of a Bookkeeper?

A bookkeeper performs a wide range of duties, whether your own or outsourced. Also, this list of responsibilities involves the record-keeping system of your business to:

  • Obtaining, recording, and paying supplier invoices.
  • Check and record employee expense reports and expense receipts.
  • Create customer statements and bills.
  • Keep track of customer payments, and print receipts.
  • Processing your payable and receivable payments.
  • Send payroll deductions to the CRA.
  • Establish your credit cards and bank accounts.
  • Create monthly financial statements, including income and cash flow statements, balance sheets, and reports.

Tip 💡

Top 5 Small Business Bookkeeping Tools to Use Online

1. Quickbooks Online

2. Freshbooks

3. Xero

4. Zoho Books

5. Sage One

4. Why Do You Need an Accountant for Your Company?

A Chartered Professional Accountant (CPA) usually supervises the vital job that bookkeepers accomplish. This is true even though many simply structured businesses do not prefer to hire a full-time accountant. But some business events necessitate collaborating with a CPA.

1. When do you need to hire an Accountant?

To analyze, confirm the correctness of, and interpret your company’s bookkeeping transactions and financial reports, you need to look for a Chartered Professional Accountant. Because a CPA can undertake general financial accounting. So, you can hire an accountant for different purposes. For example, auditing, tax management, and non-profit accounting.

Difference between accounting and bookkeeping

2. What are the duties of an Accountant?

Whenever necessary, your company should think about working with a certified public accountant (CPA). Basically, an expert accountant performs the following duties:

  • Wraps out your year-end finances.
  • Fill out your annual tax return according to CRA’s instructions.
  • Plan your finances, analyze your performance, or manage your costs and revenues.
  • Determine whether a fresh loan or capital investment is possible.
  • Create, examine, or update your company’s direction and plan.
  • Verifies your financial records, especially if you run a nonprofit or public company.

5. Hire a Qualified Bookkeeper to Administer Your Books

You may want to think about outsourcing your bookkeeping to a professional rather than hiring a full-time in-house bookkeeper. It is because bookkeeping may not be a full-time job. If so, Yogi & Associates can support you. Our staff of qualified bookkeepers can help with payroll, invoicing, collections, paying your vendors, and other tasks.

The Bottom Line!

Recognizing that each relies on the other to offer your company a full range of financial expertise and services is the best approach to take advantage of the differences between accounting and bookkeeping. Your business will gain a lot from working with a seasoned bookkeeping company. It is because you’ll have more time to manage your inventory, staff, and business expansion.

Yogi & Associates offers accounting and bookkeeping support to business owners and non-profit companies in Mississauga. So, chat with us to learn more about how we can help you streamline your bookkeeping process!

Feel Free to Contact Yogi & Associates!