Are you still confused about whether your business needs bookkeeping or accounting, or both?
For a lot of business owners, it can sometimes be hard to distinguish between them. You may think that one cannot work without the other, or that they are basically the same role.
Accounting and bookkeeping may function differently, but both roles are extremely important to each other – and above all, important to all sorts of businesses!
Our Xero bookkeeper in Melbourne is here to help you understand how bookkeepers and accountants differ, how they work together, and how they can benefit your business.
What do you mean by bookkeeping and accounting?
Bookkeeping and accounting are familiar roles that you likely associate with anything finance and business related.
While both deal with numbers and business finances, some striking differences for one role may complement qualities of the other.
So if you’re thinking about how accounting or small business bookkeeping in Melbourne can help your business, then it’s best to resolve any confusion before you move ahead.
What does bookkeeping mean?
Bookkeeping deals with every nitty-gritty detail of recording almost all of your financial transactions, from invoices, payroll, purchase orders, deposits, travel expenses, payments and many more.
Bookkeepers are required to be systematic and accurate in their work to keep track of all the financial records in an orderly manner.
Inaccurate information may lead to errors which can ultimately affect the accountant’s financial outcomes and decisions (such as budgeting).
What is bookkeeping in accounting?
Online bookkeeping will always be an essential aspect of accounting. An accountant cannot function without any reference of the day-to-day financial transactions.
From there, accountants can prepare financial reports, income statements, and balance sheets for business owners.
What are the similarities and differences between accounting and bookkeeping?
One of the most common questions that business owners ask themselves is if they need an accountant, a bookkeeper, or both?
Both are directly involved with anything related to business finances. While both share certain similarities, they also have distinct differences, too.
#1 Difference: Scope of work and functions
Bookkeepers keep track of all business transactions under one general ledger. Ledgers serve as the main document where records of receipts, sales, and expenses are updated and posted.
Bookkeepers usually use a fast, easy, and up-to-date online bookkeeping system for financial record and quite literally, the keeping of the books.
The simplicity and complexity of your bookkeeping in Brighton depends on the size of your business and the frequency of your transactions on a daily, weekly, and monthly basis.
On the other hand, accountants use various financial information supplied by bookkeepers to further analyse and interpret financial data to help business owners make critical business decisions.
Accountants may assist you with:
- Preparing financial statements and reports
- Analysing documents on cost operations
- Assisting with income tax return
- Summarising financial data
Bookkeepers usually focus on minor details of all your cash transactions, but both roles have their equal share of importance!
#2 Difference: Frequency of meetings
Business owners sometimes work with bookkeepers on a weekly or even daily basis, as financial transactions take place all the time. On the other hand, you might only need to meet with your accountant quarterly or every other month.
Business owners usually work hand in hand with bookkeepers in matters relating to:
- Inventory tracking
- Cash flow
- PAYG compliance
- Tax issues
- Jobkeeper monthly declarations
This means that business owners work much more closely with bookkeepers than they do with accountants.
However, the frequency of meetings for both can depend on the type and size of your business. A bookkeeping service like Maximum Business Solutions can give you advice on what roles you require and how often you need them.
#3 Difference: Financial advice
You may think that bookkeepers only record-keep and don’t concern themselves with giving you financial advice.
This isn’t true, bookkeepers will usually give you some advice about your business finances.
Accountants will usually use bookkeeping information to analyse and interpret financial data and put it into a complete, concrete report.
But bookkeepers can also give you practical and ground-level advice to help you make sound, financial decisions.
Bookkeepers manage transactions, handle detailed accounting processes, generate reports, and act as a MYOB partner that will give you an idea about the financial standing of your business.
#4 Difference: Every small business needs a Melbourne bookkeeper, but not all need an accountant
You may think of hiring both an accountant and a bookkeeper, but that’s not always necessary.
Depending on the financial transactions that you have to deal with in your business, you may only need a bookkeeper.
Bookkeepers assist with daily tasks, such as:
- Tracking cash flow and expenses
- Business invoicing
- Organising financial transactions
- Debt collection services
- GST calculating and reporting
Accountants heavily rely on the work conducted by bookkeepers, and both can be directly involved in your business finances.
Most of the time, accountants expect bookkeepers to:
- Frequently communicate with the business owner and the accountant
- Give timely reporting, providing greater business insight to both parties
- Track cash flow and expenses
Need a small business bookkeeper in Melbourne?
If you’re a small or medium-sized business looking for a bookkeeper in Melbourne, get in touch with Maximum Business Solutions!
Our experienced team specialise in providing various bookkeeping services for businesses across various industries all around Melbourne.
We can work with your accountant to ensure that you always have a clear and accurate picture of your business’s financial health.