Difference between bookkeeping and accounting

What’s the [Difference] Between Bookkeeping and Accounting?

Most people ask me the question: “What’s the difference between bookkeeping and accounting?” Let’s distinguish between the two once and for all.  

Financial record keeping has been around for thousands of years. Our civilizations have always needed a way to debit and credit individuals for the exchange of products and services; some people had to literally count beans!

However, it wasn’t until the 1400s that advanced accounting began to take form. Rewind 600 years and basically everyone was a bookkeeper!

It’s no surprise that what exactly the difference is between these two roles is still confusing all these years later. As the marketplace evolved and complex tax rules were introduced, the difference between bookkeeping and accounting began to widen.

Simply put:

  • Bookkeepers serve clients by doing the daily record keeping.
  • Accountants take those daily records and perform year-end work.

Easy stuff, right?

But what are the specific duties of the bookkeeper versus an accountant, you may ask? Well here’s the breakdown of those responsibilities.

Bookkeeping:

  • Bookkeepers take care of the daily record keeping, with computer programs like Quickbooks Online, while completing the everyday tasks of invoicing and collecting payments. Your bookkeeper would also be responsible for filing and paying supplier bills. Every two weeks, they run payroll to make sure that your employees get paid on time.
  • If the CRA requests an audit, a responsible bookkeeper should support the small business with CRA communication.
  • Some sophisticated bookkeepers can even generate valuable financial reports to help the business thrive.
    • For example, cash flow reports and projections can help a business owner manage cash.
    • Business unit reports tell the business owner which business opportunities are performing, and which are losing money.
    • Job cost reports can help professionals determine which jobs/projects made them money and how much.
    • Your bookkeeper can give you the clarity that you’ve never had before while giving you the tools to take your business to the next level.

Essentially, the bookkeeper’s primary role is to support the business owner to help them make better decisions on a weekly or monthly basis.

The bookkeeper’s role is to support the business owner & help them make better decisions Click To Tweet

Accounting:

  • Once the bookkeepers have recorded all the transactions for the year, they give the financial records to the accountants who perform the higher level work, like reviews, audits, and filing tax returns. During that process, they may do some tax planning to minimize your taxes.
  • An accountant may also help the business owner with more complex problems, such as cross-border expansion, fundraising, and estate planning.

In Summary:

As you see, both roles are integral. It’s important to have a strong financial team that can support you throughout the year and at year-end.

  • Bookkeeping gives you the data to help you confidently make everyday decisions.
  • Accountants help you reduce the tax burden and support you in complex business problems.

Hopefully, that has put to rest any confusion around the difference between bookkeeping and accounting. Now, you should have a better idea how to leverage the skills of a bookkeeper and accountant to improve your business’ performance.

Have more questions about the difference between bookkeeping and accounting?

Feel free to contact me, Bob Wang, founder of Legacy Advantage, directly if you have any questions!

You can reach me at bwang@legacyadvantage.ca.

About Bob Wang

Bob is the owner and founder of Legacy Advantage. He holds a CPA and has experience at a private client services brand, Big 4. Bob's passionate about empowering organizations through quality bookkeeping services.
12 replies
  1. Jackie Oliver
    Jackie Oliver says:

    You know, I have never known the difference between an accountant and a book keeper. I didn’t now that the bookkeeper was responsible for reports and things like paying bills to the suppliers. For a business, I could see how it would be very beneficial to have an bookkeeper on hand. They take care of so many different parts of the business!

    Reply
  2. Robert Henry
    Robert Henry says:

    Bookkeeping and accounting are 2 different business related process. Usually the work of a bookkeeper and accountant overlap as bookkeeping is a part of accounting and accountants are those who build on information provided by the bookkeeper. A bookkeeper keeps all the record of financial transactions of business where as accountants apply further financial analysis to the financial records kept by a bookkeeper. So, on a overall basis I can say that bookkeeping is the first and most essential step in the process of accounting.

    Reply
    • Bob Wang
      Bob Wang says:

      Both roles are super important. Bookkeepers are the first line of defense, so we interact with the client more frequently. I love the role we play in our clients’ businesses.

      Reply
  3. Bori ILIEVA
    Bori ILIEVA says:

    There are some times difficulties in communications between bookkeepers and accountants. How do you manage to keep that relationship in constructive and productive way?

    Reply
    • Bob Wang
      Bob Wang says:

      I totally understand! The key is to not get defensive and reach out to have a conversation. I don’t think anyone intends to do a bad job. In our case, if there is difficulty in communication, I always ask for a meeting. An in-person conversation goes a long way to clear up any misunderstandings.

      Reply
  4. Saif
    Saif says:

    Hi Bob Wang,
    The great understandable informative post you shared on this page about professional accounting Software for running a successful business, I read this post and remember the best points especially ” Trinity Accounting Services ” you shared in this article which help me for running a business successfully with the help of professional accounting .If you want to start a business successfully then you must read this article carefully and keep it in your mind all the best points of a great article which help you to running a business successfully with the professional accountant .
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    Reply

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