What's the difference between bookkeeping and accounting?

Few people know the difference between bookkeeping and accounting. In fact, many people use the terms interchangeably. But there is a big distinction between the two services, and it's important to understand what sets them apart.

At its core, bookkeeping is the process of tracking and recording financial transactions for a business. This includes recording deposits, payments, and other income and expenses. Bookkeepers track how much money a company has earned and spent, as well as its assets and liabilities. By ensuring accurate and up-to-date financial records, bookkeepers help businesses minimise risk and optimise their performance.

Accounting, on the other hand, is the process of compiling and analysing all of this information to create financial reports. Accountants use these reports to assess a company's financial health and make recommendations for improvement. They also provide valuable advice and guidance on taxes and other financial matters. As such, businesses that rely on accurate accounting information are more likely to succeed in the long run.

What should you expect from a great bookkeeper?

• They interact on a daily basis
• Compliance: BAS, and IAS (where applicable) preparation, and if required submissions
• Data entry, bank reconciliations & expense reimbursement
• Payroll service
• Accounts payable and receivable service
• Monthly finance reporting & meetings
• Software advisory set-up, migrations & integrations

Bookkeeping Compliance & Important Dates

Monthly

• IAS (Instalment Activity Statement)    
• Employee PAYGW Tax
• Payroll Tax: For those that pay wages & super above $1.2m

Quarterly

• BAS (Business Activity Statement)    
• Employee PAYGW Tax & GST
• Superannuation

Annually

• Preparation of Fringe Benefit Tax (FBT) return for the accountant    
• Single touch payroll finalisation
• Year end preparation for the accountant

What should you expect from a great accountant?

• They understand your business and your unique requirements
• They are proactive!
• Tax compliance
• The ability to manage tax compliance for a range of business structures, including: Individuals, trusts, companies, partnerships & SMSF
• BAS submissions and FBT returns
• Tax planning & minimisation
• Business advisory
• Reporting incl. KPIs, financial analysis, “what-if” modelling
• Support in setting up a new business
• M&A and selling advice
• Financial Statements & Management Reporting
• Strategic Tax Advice

How do accountants and bookkeepers work together?

Accountants and bookkeepers often work closely together to ensure the financial health of a business. While accountants are typically responsible for analysing and interpreting financial records, bookkeepers are typically responsible for compiling and updating those records. In addition, accountants may rely on bookkeepers to provide accurate information on a regular basis.

In some cases, the tasks performed by bookkeepers may overlap with those of accountants. For example, both roles may be responsible for preparing financial statements, tracking expenses and revenues, or managing payroll.

However, there are also many differences between the two roles. While accountants typically have more advanced knowledge of finance and accounting principles, bookkeepers typically have more training in using software to track financial data.

In addition, accountants may work with businesses to develop accounting and reporting systems, while bookkeepers typically focus on ensuring that these systems are maintained and updated over time.

Overall, the skills and expertise of bookkeepers and accountants are complementary, and the two roles often work together to ensure the success of a business.

Do I need a bookkeeper and an accountant? 

Every business, no matter how big or small, needs bookkeeping and accounting services in order to stay financially healthy. Whether you are just starting out or have been running your business for years, it is important to work with experienced professionals who can help you track and analyse your financial data effectively. 

These professionals have the training and expertise needed to ensure that your financial records are accurate, up-to-date, and easy to access. 

In particular, working with an experienced bookkeeper can help you stay on top of your company's financial accounts, minimise the risk of fraud or errors, and make better decisions based on your financial data. And working with an accountant can help you improve your bottom line, optimise growth opportunities, and stay ahead of tax regulations and other legal requirements. 

Overall, hiring a bookkeeper or accountant can help you build a stronger and more successful business in the long run. So, if you are looking for reliable financial support, consider working with both a bookkeeper and an accountant today.

Conclusion

Whether you need bookkeeping or accounting services, it is important to understand the key differences between these two vital business functions. At its core, bookkeeping involves tracking and recording financial data for a business, while accounting involves compiling and analysing that information to provide valuable insights into a company's performance. While accountants and bookkeepers often work closely together, they each offer unique skills and expertise that are essential to the success of any business.

If you're looking for an experienced and reliable bookkeeper to help you keep your finances in order, contact Numeric Eight today. We offer a wide range of bookkeeping services that are tailored to meet your specific needs. Our team of experts will work with you to ensure that your financial records are always up-to-date and accurate. We also work closely with accountants to provide valuable insights into a company's performance. By combining the skills and expertise of bookkeepers and accountants, we can help your business achieve its goals and grow successfully. Contact us today to learn more about our bookkeeping services and to get started!