What is the Difference between Bookkeeping and Accounting?

29 Sep

By: jnawali

Accounting Services / Bookkeeping Services

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Bookkeeping and accounting may come across as the same function for most people. Although both areas are essential for businesses, there are fundamental differences between the two. So if you are thinking of investing in small business bookkeeping services in Toronto, you must clearly understand what it entails before hiring resources or agencies. Here is a quick guide on what both functions do and how they are different from each other.

What is Bookkeeping?

Bookkeeping, in general, is more transactional and administrative. It involves recording daily financial transactions. It also includes the maintenance of a ledger, updating it with details of daily transactions. Besides recording transactions, it involves posting debits and credits, producing invoices, preparation of financial statements such as balance sheets, cash flow statements and income statements; maintaining and balancing subsidiaries, completing payroll, and more. It helps to know that the complexity of the bookkeeping system typically depends on the size of the business.

What is Accounting?

Accounting is far more subjective than bookkeeping. It is a high-level process that involves analyzing the data recorded by bookkeeping to produce financial reports. It includes recording expenses that have occurred and are yet to be captured in the bookkeeping process, reviewing financial statements, analyzing costs of operations, completing income tax returns and using this information to help the business owner understand the impact of financial decisions.

In general, accounting gives insights into the financial health of a business. It turns the information from ledgers into valuable insights to help the business function better.

Besides these functional differences, there are several other differences between small bookkeeping services and accounting, specifically so in the skill sets of the personnel who will take care of these functions.

Differences between Bookkeeping and Accounting

Credentials of the Bookkeeper

Bookkeepers specialize in recording all financial transactions regularly and keep the records ready for the accountant to analyze. Their primary role is to ensure you are financially organized and can help you take an overview of the financial transactions your business is involved in.

Credentials of the Accountant

Accountants, on the other hand, analyze the information updated by the bookkeeper and generate insights that can help you further your business. An accountant must hold at least a bachelor’s degree in accounting. For those who do not have a degree in accounting, a degree in finance also works. Since they are responsible for financial forecasting for the business, they mostly opt for formal training to enhance their skills.

While small business bookkeeping and accounting may have different functions, but for any business to succeed both these functions must work in complete sync. If you are mulling the idea of engaging accounting and bookkeeping services for small businesses, make sure you take into consideration their credentials and performance track record.

Need expert advice? You can reach out to Apex Accounting – one of the most trusted names for accounting and bookkeeping services for small businesses services in Canada!

Get Professional Bookkeeping Services for Small Businesses

Apex Accounting offers bookkeeping services for small businesses to ensure that all financial transactions are regularly documented and updated. You can also consult our experts to know more about affordable accounting and taxation services.

If you have any questions about bookkeeping services in Toronto, contact us by calling (649) 979 -7728. You can also write to us at info@apexaccounting.ca. We would be glad to help you!

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