Bookkeeping vs. Accounting - what are the differences?

Diligent financial management is critical for business success. While some businesses manage this effectively in-house, many companies also choose to employ bookkeepers and accountants to maximise their financial health. Whilst similar and often mistaken for the same role, bookkeeping and accounting have several notable differences.  

What is bookkeeping?

Bookkeeping focuses on recording and organising financial data. It is critical that all information is recorded in a systematic and clear way as this is usually the first step of the accounting process from which the later work and analysis builds upon. 

Key tasks: 

• Recording financial transactions 

• Managing payroll 

• Maintaining general ledger  

What is accounting?

Accounting is the interpretation, analysis and presentation of financial data. An accountant has a wider range of responsibilities and looks at the larger financial picture with the information provided by the bookkeeper.   

Key tasks: 

• Data verification and analysis 

• Preparing financial statements  

• Business and financial forecasting 

• Auditing  

• Reconciliation

Goals and challenges 

The overall goal of both roles is to aid businesses, the bookkeeper does this by maintaining the general ledger, documenting continuously and chronologically. The goal is to maintain perfect accuracy as the first step in the accounting process. The accountant takes the information and uses it in their analysis to help guide the business. Their goal is to help the client successfully forecast, plan and maintain the financial health of the business.  

Challenges come when information is incorrectly recorded or key data is missed. Incomplete data can result in inaccurate forecasting and advice so it is vital that both bookkeepers and accountants execute their role with diligence.