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15760 Ventura Blvd, Suite 610 Encino, CA 91436
FREE CONSULTATION818-436-2775
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Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

Bookkeeping vs. Accounting: What’s the Difference?

Small business management is often more complicated than people think. In order to be an effective small business manager, you have to understand any and every aspect of your company.

One subject that most new business managers aren’t prepared for is the difference between bookkeeping and accounting. It’s common for people to use these terms interchangeably.

However, bookkeeping and accounting have a number of notable differences. Understanding the differences between these two tasks will help you run your business more efficiently.

Let’s take a look at how bookkeeping and accounting differ and how you can use this information to improve your small business management practices.

Bookkeeping vs. Accounting

Bookkeepers and accountants both serve very important purposes and are able to work together to improve your company’s wellbeing.

Be that as it may, there are a few important distinctions that you should understand.

What is Bookkeeping?

Bookkeeping primarily includes reporting, retrieving, and storing any and all transactions made by your business.

This could include sales, purchases, invoices, company receipts, payments, and more. Essentially, bookkeepers are responsible for overseeing any transactions your business might make on a daily basis.

Bookkeepers usually have an associate’s degree or should generally have at least two years of experience.

Bookkeepers typically also process payroll information, generate invoices, create monthly financial statements, and more.

Small businesses need bookkeepers in order to keep accurate and organized financial records.

What is Accounting?

While bookkeepers manage financial records, accountants are more like financial advisors. Good accounting practices are a critical aspect of effective small business management.

Accountants analyze financial reports and statements in order to provide insight into the financial wellbeing of your company.

Using this information, accountants can create strategies and offer advice to help you improve your business’ financial habits.

Accountants can provide financial projections, classify your company’s spending, manage your cash flow, and more.

Generally speaking, accountants offer a higher level of financial expertise than bookkeepers.

CPAs, or certified public accountants, are held to a higher standard than bookkeepers. In order to achieve this certification, individuals must meet certain educational and experience requirements. Furthermore, they have to continue their education throughout their careers to keep up with new regulations.

How Bookkeeping and Accounting Relate

While accountants and bookkeepers play different roles, they often perform some of the same duties and depend on each other to benefit their clients.

Bookkeepers and accountants often provide financial advice, manage cash flow, and help improve record-keeping practices.

Additionally, while bookkeepers are responsible for recording, organizing, and storing financial transactions, accountants depend on this data to provide sound advisory services.

Ultimately, both roles help improve small business management practices by organizing your company’s financials and helping you improve your financial habits.

Do You Need an Accountant and a Bookkeeper?

In the early stages of small business development, small business managers often take on bookkeeping responsibilities themselves.

Often, this is perfectly fine. When your business is small, these duties are much easier to handle. However, as your company continues to grow, you should absolutely consider passing on the bookkeeping responsibilities to a professional to help maintain the accuracy and organization of your financial records.

Every small business can benefit from hiring an expert accountant. One of the biggest struggles of small business management is managing your company’s finances.

Accountants will provide expert analysis and planning to help you maximize your available capital and grow your business.

If you need help managing your company’s finances, contact us to take advantage of our full-service accounting and bookkeeping services. ATPP helps our clients in Southern California manage their finances so they can continue to grow and serve their local communities.