Difference Between Bookkeeping and Accounting


Difference Between Small Business Bookkeeping and Accounting Software

Some people think that bookkeeping and accounting, as well as the bookkeeper and accountant, are the same things. What are the main differences between bookkeeping and accounting? Bookkeeping involves the recording of the company’s financial transactions on a day-to-day basis and is a part of the accounting process. As to the terms "accountant" and "bookkeeper", they can be interchanged to a degree. Literally, the bookkeeper keeps the company's books and stores documentation about financial transactions. Bookkeepers start acting as data-entry clerks and grow through their merit and experience and merit.

The term "accounting" is much broader than "bookkeeping"; it means establishing control to be sure the company is working well, verifying and analyzing the recorded information. Accountants provide measuring the financial effects of the company's economic activity and reporting the financial values, performance, and condition to business managers, investors, and others who need this information.

Thus, accountants provide the internal control for the bookkeeping system, with a purpose to minimize errors in recording the activities which the company engages for some period of time. The internal control that is performing by accountants is also required for detecting and deterring fraud, theft, embezzlement, and other dishonest behavior.


Using computers today gives accounting and bookkeeping new opportunities. All companies from small business to huge corporations use accounting software and bookkeeping software to manage and control their financial operations. Computer programs allow eliminating many of the bookkeeping and accounting tasks. But at the same time, computerization requires from bookkeepers to have knowledge of debits and credits and the basic understanding of accounting, including the income statement and balance sheet.

Bookkeeper ensures that records of the company's financial transactions are up-to-date, correct, and comprehensive. Therefore, accuracy is vital in the bookkeeping that provides data and information from which accounts are prepared. Bookkeeping software eliminates errors that had occurred when amounts were manually entered, rewritten and calculated. The main bookkeeper’s duty is to create the financial statements which can be used by the accountant for performing the legal and tax management at the time. These financial records are required by law and are critical to business success.

Accountants prepare statements and reports such as financial statements, tax returns, and others, based on the data and information gathered while the bookkeeping process. Profit measuring is one of the critical tasks that accountants perform. The accountant makes a decision about how to measure expenses and sales revenue to determine the loss or profit for the period of time. So, accountants create orders, bookkeepers follow those orders. Despite the fact that all companies use bookkeeping software and accounting software, the accuracy of the information recorded by bookkeepers remains to be critical.

Bookkeeping and Accounting Difference