How does bookkeeping differ from accounting?

While Accountants and Bookkeepers both have a natural flair with numbers, their roles are different.

What's the difference between a Bookkeeper and an Accountant?

Simply put, an accountant is an analyst. He looks at the big picture by reviewing your financial statements (profit and loss, balance sheet, cash flow).

Whereas, a bookkeeper is your details person. He is your day-to-day task master. They make sure that deadlines are met, bills are paid on time and customers are paying you, says Common Cents.com.

Here's what you need to know about Accountants:

• High levels of strategic thinking and planning than bookkeeping. For example, it's usually an accountant who is given the job of setting up the systems a business will use to monitor its financial transactions.
• Creates and presents reports that allow top executives to make financial decisions for the company. Accounting reports include balance statements, profit and loss statements and cash flow reports. These reports are often derived from the work of bookkeepers and sometimes include a series of complex adjustments made by the accountant.
• Ensures that financial records are consistently accurate. In larger companies, this usually involves overseeing the work of the bookkeeping staff.
• Implement measures to test the accuracy of bookkeeping records, to monitor the financial progress of the business and to deter fraud.

Here's what you need to know about Bookkeepers

As mentioned, bookkeepers are responsible for keeping detailed records of the financial transactions for a business.

outlines some of the duties done by Bookkeepers:

Perform duties such as tracking the amounts and dates of payments that are owed to a company, issuing invoices and recording when payments are received. These data entry tasks usually fall under the heading of accounts receivable.

Keep records of payments the company will owe. Usually this involves reviewing incoming invoices, collecting documents to ensure the invoices are accurate and making payments. These functions are collectively known as accounts payable.

Executing employee payroll. This includes documenting hours worked by hourly employees, keeping records of salaries due to employees, tracking employee benefits and issuing payroll payments.

Should you hire an Accountant or Bookkeeper?

It all depends on your business needs. Just keep in mind that the tasks and skills are different for each job and you may need both to streamline your business.

Essentially, 'bookkeepers and accountants are the confidants of the business world. You probably share more confidential information with them than with your clergyman. The trail left by your money reveals your life story,' says entrepreneur.com.

That said, you have to balance privacy against the value of expertise.

Now that you know the difference between bookkeeping and accounting, entrepreneur.com recommends you find a bookkeeper or accountant who specialises in your industry. You can start by contacting your industry association, or ask a lawyer who knows your business.