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Our bookkeepers in Melbourne explain the difference between bookkeeping and accounting

Wednesday, July 04, 2018 - by Max Business

Bookkeeper, accountant… tomato, tom-ah-to. What’s the difference?

While both bookkeeping and accounting perform similar functions (to the point where many think they’re the same), both are distinct professions.

That means different skill sets and different services offered. In fact, the only consistent similarity between the two is that both work with numbers!

Our bookkeepers in Melbourne are here to help you distinguish these two important roles.

Bookkeepers in Melbourne

What’s the difference between bookkeeping and accounting?

When we work with first-time business owners on their business bookkeeping, one of the first things out of their mouths isn’t questions about cash flow, or about bookkeeping software.

No, for many clients their first question is “What’s the difference between accounting and bookkeeping?”

Difference 1: accountants and bookkeepers differ in scope

While both bookkeepers and accountants work with numbers, the scope of our work differs.

Think of it this way: your accountant is the big-picture half of the bookkeeper-accountant relationship. They deal with high-level stuff like financial health, corporate reporting and overall business direction.

Your bookkeeper on the other hand looks after the nitty-gritty. We focus on small details, like how much cash is coming in. Both roles are equally as important!

Difference 2: how often do you see each other?

Another way your accountant and bookkeeper differ is how often you see them.

Many business owners only see their accountant a handful of times each quarter. After all, it’s not every day that you need to put together complex statements or completely redo your budget!

Your Cheltenham bookkeeper on the other hand has more of a boots-on-the-ground perspective on your finances. We look after things like your:

  • Invoices
  • Payroll
  • Expenses
  • Cash flow
  • Inventory tracking
  • PAYG compliance

We look after the type of information you need now.

Because of this, your bookie is perfectly placed to give you immediate, actionable information. And that means that many business owners are in much closer (and constant) contact with their bookkeeper.

Difference 3: bookkeepers and accountants offer completely different advice!

Google the difference between bookkeeping and accounting, and most results will tell you that accounting is more analytical and advisory, while a bookkeeping is more by-the-numbers.

We’re here to tell you that’s simply not true!

Your bookkeeper in Cheltenham is just as capable as offering you advice regarding your business finances.

The key difference is the type of advice we can offer.

An accountant about high-level strategic information like your corporate reporting. On the other hand, your bookie can also help you by giving you tactical, ground-level advice you need right now.

Difference 4: Not all businesses need an accountant… but all businesses need a bookkeeper!

Ideally, you should be employing both a bookkeeper and an accountant for your business.

However, not all businesses need both. In fact, for many small businesses, a bookkeeper might be all you need!

Small businesses (sole traders in particular) don’t need complex reports laying out their various assets and whatnot:

  • Their budgets are relatively straightforward
  • Assets and liabilities are easy to keep on top of
  • Tax obligations are low
  • They have few staff, making payroll simple

As such, many smaller businesses may not need an accountant.

What they do need, however, is:

  • Accurate records of day-to-day transactions
  • Proper invoicing
  • Tracking of expenses and cash flows
  • GST calculating and reporting
    Bookkeeper Melbourne

Blurred lines: when a bookkeeper is an accountant

There are some things that are 100% mutually exclusive - you can have one or the other, but never both. You can’t get heads and tails at the same time when you flip a coin!

Fortunately for you, accounting and bookkeeping are not one of these things.

In fact, bookkeepers like Maximum Business Solutions work alongside accountants, creating a complete picture of your business’ financial condition!

Your accountant focuses on big-picture stuff. To put together their reports, your accountant relies on information provided by us.

Additionally, thanks to the proliferation of software like Xero and MYOB, the line between accounting and bookkeeping is blurring.

Nowadays, many bookkeepers are starting to offer services that were once the sole domain of accountants:

  • Balance sheets
  • Audit preparation
  • Tax compliance
  • Consultations
  • Account cleaning

Need a bookkeeper in Cheltenham?

Get in touch with Maximum Business Solutions!

Are you a small or medium-sized business looking for a bookkeeper in Cheltenham?

If so, you’ll want to touch base with Maximum Business Solutions!

Our experienced team of bookies specialise in providing bookkeeping services for small and medium businesses all over Melbourne.

We work with your accountant to ensure you always have an accurate picture of your business’ financial health.

Tired of doing everything yourself? Give our team a call today on (03) 9589 0128, or send us a message to arrange a catch-up!