It is indeed good to hear if you as an entrepreneur knew the difference between bookkeeping and accounting. However, if not, it is not too late to know them now as this plays an essential role in making sure that your documents and financial records are intact.
To start with, here is the difference between the two.
What is bookkeeping?
This is a very important question and deserves an answer. Bookkeeping is the act of accurately recording cash, credit, and other transactions in your books of account.
Today’s bookkeeping is more likely to be done electronically than it is with handwritten notes. This is true for any business, regardless of size or importance. In fact, some are even using the best bookkeeping app to keep track of the entire business records.
What is Accounting?
Accounting is a critical part of running a business. It helps you keep track of income, expenditures, fulfill statutory requirements, and provides investors, management, government, and other stakeholders with quantitative financial information that can be used to make business decisions.
Accounting can be performed by an accountant or a bookkeeper in a small company, or by large finance departments that employ dozens of people at larger firms.
When Should You Hire a Bookkeeper or an Accountant?
The answer would depend on your capacity as a business owner. It is beneficial to have them both even if you have a small business. Bookkeepers and accountants are both experienced and well-trained to do the business tasks for a company.
Entrepreneurs may hire an in-house staff of outsourcing accounting if they really need to. Meanwhile, they can look for free accounting software for small business. This can help them do basic accounting before they hire someone.