Every business owner needs to know the difference between bookkeeping and accounting. People often mistake these two terms for each other, but they are not the same. The differences are subtle yet vital; this article will explain them. For further research about accountant in melbourne be sure to head over to Liston Newton Advisory.
What Is Bookkeeping?
It is the process of keeping accurate financial records for a business. It involves recording and classifying every transaction accurately. The bookkeeper must record transactions on a regular basis and ensure the corporate books are kept up to date. They should be able to spot any mistakes and correct them as needed.
What Is Accounting?
Accounting is the process of recording, processing, and analyzing financial transactions for a business. It involves reconciling financial records with bank statements to ensure no discrepancies. It also involves analyzing the financial records to forecast future sales and help the company prepare for future growth.
Bookkeeping is a subset of accounting. Bookkeepers ensure the small pieces of a company’s financial records are set in place, but accountants use those small pieces to draw insights and conclusions.
Bookkeeping is easier than accounting. You can become a bookkeeper straight out of high school if you’re good with numbers. However, accounting requires professional training, preferably a bachelor’s degree from an accredited college or university.
Many aspiring accountants start their careers as bookkeepers to get their foot into the door. Many skilled bookkeeping professionals undergo further training to become professional accountants.
Key Differences
Let’s explore the differences between these two careers in different areas;
Educational Requirements
Employers have a lax degree or professional training requirements for bookkeepers. You’ll need a high school diploma or GED and basic math, writing, and communication skills. Many bookkeepers have associate’s or bachelor’s degrees, but it’s not compulsory.
In contrast, accountants need professional training, preferably a bachelor’s degree in accounting. This degree takes about four years and 120 credits to attain. People with associate’s degrees from community colleges can enter the industry as bookkeepers and accounting clerks and work their way up.
Becoming a certified public accountant (CPA) is also beneficial, which requires at least 150 hours of coursework and passing a professional exam. You must not have an accounting or finance degree to become a CPA, but your degree must have a minimum number of credits in accounting and business subjects.
Job Outlook
Accountants have more job opportunities than bookkeepers. The former is a growing career as companies need professionals to sort out their increasingly complex finances. In contrast, bookkeeping duties are increasingly automated, leading to downward pressure on the industry. Jobs are growing significantly in accounting, but not in the other.
Required Skills
Both accountants and bookkeepers must be good at computation. People who don’t like math are not suitable for both roles. People in these positions must have a knack for calculating and reconciling figures.
The difference in the required skills is that accountants should be more comfortable handling long-term projects. They are usually assigned long-term finance projects, while bookkeepers handle short-term tasks and juggle different ones.
Accountants should learn big-picture thinking because they’re responsible for analyzing financial data and extracting insights. Bookkeepers, on the other hand, are primarily concerned with recording and classifying financial transactions.
Conclusion
We have provided a detailed answer to “What is the difference between accounting and bookkeeping?” At this point, you should clearly understand the difference between both roles and what each requires to succeed.
