Bookkeeping vs. Accounting — A Success Guide For Your Business | Greenough Group
If you’re reading this, you’re likely a growing business seeking clear guidance on how to set up your finances for success. The terms bookkeeper and accountant are often used interchangeably as both roles deal with financial data, have levels of accounting knowledge, and the ability to generate reports. But these two professionals deal with different aspects of your finances.
What Are The Differences Between Bookkeeping and Accounting?
A smaller business can likely make do with bookkeeping services or software to start, but any business that wants to derive deep insight from their numbers should seriously consider investing in accounting services.
What is Bookkeeping?
Bookkeeping is integral to any business, and involves the recording of financial transactions in ledgers and journals. Without a proper record of financial transactions, accountants can not perform the analysis that allows businesses to make smarter decisions.
A bookkeeper’s responsibilities include:
- Logging all debits and credits and comparing them against bank balances
- Creating customer invoices and making payments on behalf of your business
- Tracking accounts payable and accounts receivable
- Maintaining your financial reporting system / ledger software
In larger organizations, a bookkeeper will often be overseen by an accountant, and many who are working towards becoming accountants start as bookkeepers.
What is Accounting?
A Certified Public Accountant (CPA) specializes in preparing financial statements, interpreting financial data compiled by the bookkeeper(s), communicating finances to stakeholders, and assisting in making critical business decisions. They oversee the financial health of your business and provide detailed insights that a bookkeeper would not.
Responsibilities of an accountant include:
- Preparing the financial statements for your company
- Financial budgeting and loan proposals
- Preparing dynamic financial forecasts
- Performing cost analysis on your operations
- Completing tax returns
- Preparing financial reports and presentations
All rapidly-growing companies should employ the services of an accountant to ensure they’re making smarter decisions.
Can Pilot or Bench do The Same Work as an Accountant?
Pilot and Bench are popular bookkeeping software solutions that are designed to simplify the bookkeeping function. Many small businesses look to Pilot or Bench to take care of their bookkeeping and finance needs, and that’s great early on when your finances are simple. However, they are not made to manage complex finances (think loans, tax credits etc.) and can’t provide the true analytical capabilities a CPA can.
When Should a Small Business Bring on an Accountant?
If your business is in its infancy or your tax situation is very simple, you probably don’t need an accountant. However, any small business whose business is booming and looking to rapidly expand should definitely be looking to onboard accountancy service. A study conducted by Intuit, the software company behind Quickbooks and TurboTax, revealed that 89% of SMBs saw more success with the aid of an accountant.
Though onboarding an accountant obviously comes at a cost, all too often businesses that wait too long end up losing time and money having to perform their own finances and lacking the analytical capacity of an accountant. If you’re not ready to onboard a full-time accountant but still want access to financial services, consider looking to an accounting services firm like Greenough Consulting Group.
California Businesses Trust GCG With Their Accounting Needs
Greenough Consulting Group’s client accounting services are highly sought by both small businesses and rapid-growth tech startups alike.
GCG is the preferred accounting firm of executive Tom Rowley, who has utilized GCG’s services in several of his ventures: “I’ve brought GCG into my last four startups. Getting finance running smoothly, as quickly as possible, allows me to focus on building the business. Hiring GCG is one the first things I do.”
Our reputation for accuracy, senior attention, and exceptional client service has made us one of the financial community’s most highly recommended back-office services firms. Contact us today for a free consultation and learn how we can help you focus on growing your business.
Originally published at https://www.greenoughgroup.com on March 18, 2020.
