What's The Difference Between Bookkeeping And Accounting?
The spread of COVID-19 presents serious concerns and challenges for many business owners. But most of them are easy to navigate when you have a bookkeeper and Accountant by your side. This is because it’s nearly impossible to run a business for very long without sound knowledge of your finances. And bookkeeping and accounting help you with that. While most people regard bookkeeping and accounting as one and the same thing, the two differ.
In this article, we explore the differences between the two.
Let's dive in!
What Is Bookkeeping?
Bookkeeping is a process of accurately recording and organising all the financial transactions of any business; irrespective of its size. It focuses on recording the cash coming in and out of a business, to ensure that all your invoices, sales, and expenses are properly recorded. Furthermore, a bookkeeper will make sure that all the accounts of a business balance.
Why Do You Still Need A Bookkeeper?
When your bookkeeping is in order, it's easy to file for tax, and know whether you should register for VAT. Over and above that, bookkeeping will help you to organise your financial transactions so that you present accurate accounts to potential investors, lenders, business partners, etc.
Typical Bookkeeping tasks include:
- Processing invoices;
- Processing receipts, payments, and other financial transactions,
- Recording business transactions,
- Recording transaction,
- Managing petty cash,
- Filing and document management.
- Chasing customers for payment.
- Posting journal entries.
- Preparing and filing VAT returns.
- Providing basic SARS advice.
What is Accounting?
According to Investopedia, Accounting is the process of recording financial transactions pertaining to a business. This can include summarising, analysing, and reporting financial transactions to regulators such as CICP, or even SARS. The financial statements used in accounting are a concise summary of financial transactions over an accounting period, summarizing a company's operations, financial position, and cash flows.
Simply put, accountants organise all crucial financial data and prepare reports for business owners and investors. But before they can do this, accountants expect you to accurately record your transaction using accounting software, or a spreadsheet before they can help you. At MGT we can do both.
Typical Accounting duties include:
- Preparing adjusting entries.
- Preparing financial statements and reports.
- Completing income tax returns.
- Financial analysis and strategy.
- Tax strategy and tax planning.
- Financial forecasting.
- Organising budgets.
- Analysing business performance.
- Auditing, and
- Financial management advice.
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