Accounting & Bookkeeping – What’s the Difference?
Accounting and Bookkeeping services are both important in managing your business finances, but many business owners don’t know the difference. While Bookkeepers and Accountants share the same goal of supporting your business and helping you to achieve success, they have very different roles.
Simply put, Bookkeeping is the recording of financial transactions, while Accounting is the interpretation, analysis and summarising of this financial data.
It could be said there are 3 steps to your business finances:
- You run the business, make the money!
- Your bookkeeper will organise this financial data into manageable and reportable information
- Your accountant will interpret this information and analyse financial reports to help you make business decisions.
What is Bookkeeping?
Bookkeeping is the cornerstone of your business financial success. It helps you run your business day to day and allows you to meet your ATO obligations. Bookkeeping services include:
- Payroll & Superannuation
- Accounts Payable
- Accounts Receivable
- Tracking of GST
- Bank Reconciliations
- Maintenance of General Ledger
Bookkeeping organises your transactions to produce basic finical reports such as Profit & Loss, Cost of Goods Sold and Balance Sheet. It also makes possible all of your ATO obligations, like BAS, IAS, Payroll tax and Superannuation.
Whilst Bookkeeping takes care of your day to day, Accounting is what should drive your business forward. Good Accounting should set goals, track them and give you the information you need to better run your business. It is crucial for growth, crisis management and strategic planning. A good accountant will help you answer the questions like “If I made a profit, why is there no money in the bank?”
Accounting services include:
- Preparing financial statements and reports
- Financial analysis and planning
- Setting budgets
- Analysing business performance
- Financial management advice
- Preparing business plans and cash-flow forecasts
A good accountant should help you set targets and guide you through your reports so that you can understand what you need to work on to improve your business profitability.
How does accounting and bookkeeping help your business grow?
Bookkeeping lays the foundations for your business finances. It allows you to meet your ATO obligations and supplies the information and reports your accountant needs to be able to do their job. The reports from your Bookkeeper are great, but not if you can’t understand them. Your accountant can breakdown this information and help you utilise this for planning for the future. In reality your bookkeeping and accounting services are symbiotic.
Armed with the information produced by your bookkeeper, your accountant can show you a complete picture of your business finances. They can analyse your reports and show you where things can be improved. Addressing questions like, “why have my payroll figures increase in the last quarter?” or “”Why did I miss my profit target if I hit my Sales Forecast?”
Growing your business will come with careful planning. Setting budgets and comparing them to your actuals will give you a clear indication of where you are kicking goals and areas that might need more attention. With knowledge come power, and having a full, clear picture of your business financials, will lead you to growth and success.
Cloud based accounting allows for efficient and seamless work between your accountant and bookkeeper. In the case of cloud accounting, you keep your business books online, it is now seen as a must for running a successful business. You will save time and money on your accounting fees and limit human error. Cloud accounting allows for integration to other software you may use in your business such as POS and Payroll and a direct link to your bank and the ATO.
Your data is safe and secure as the information is encrypted, much like a bank’s, so only people with the login can view the data. There are many cloud accounting software available and you should do the research to see what best suits you, your bookkeeper and accountant.
Pacific Accounting And the best news?! Pacific Accounting provide both Bookkeeping and Accounting services. We pride ourselves on a comprehensive approach to your business financial needs. We can take care your day to day bookkeeping needs, your ATO obligations and can help you plan for the future and your success.