Bookkeeping vs accounting: Do you really know the difference?


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Industry newcomers tend to use the terms “bookkeeper” and “accountant” interchangeably, but there are a few important distinctions between the two. 

Bookkeeping focuses on managing financial books by documenting transactions, managing accounts, and recording financial data. This includes responsibilities like delivering balance sheets and income statements, confirming account accuracy by preparing trial balances, reviewing documents, and posting entries into accounting software.  

Accounting focuses on using that data to assess the financial health of a business and make data-driven business decisions. This includes responsibilities like overseeing a bookkeeper’s work to ensure accuracy, making adjustments to trial balances, generating financial statements, and producing financial reports that are needed to file business tax returns. 

Below, we’ll take a closer look at bookkeeping vs accounting, their key differences, and how working with bookkeepers and accounts can benefit your small business.

What is bookkeeping? 

Bookkeeping is the process of recording all financial transactions a business makes from its opening to its closing. This practice helps establish the company’s financial outcomes and allows owners to track where their money is going. Bookkeepers record transactions based on documentation such as: 

Purchase orders 




Any other reports that indicate someone made a transaction 

Bookkeeping has two main methods: single-entry and double-entry. Single-entry bookkeeping tracks the basics of a company’s spending and earnings, while double-entry bookkeeping tracks additional transactions such as assets, liabilities, and overall company financial health.

Regardless of the type of bookkeeping a company chooses, recording the day-to-day business financial transactions is an integral part of accounting. 

What does a bookkeeper do? 

bookkeeper keeps track of day-to-day business finances, like recording transactions and managing general ledgers. Good bookkeepers are organized, skilled with numbers, and natural problem-solvers.

Common bookkeeper responsibilities include: 

  • Recording daily transactions: Bookkeepers review source documents and post journal entries into accounting software. 
  • Reconciliations: Bookkeepers reconcile bank accounts and review the general ledger to ensure that financial information posts to the correct accounts. 
  • Delivering reports: Bookkeepers deliver balance sheets and income statements. 
  • Producing invoicesBookkeepers may be responsible for preparing and sending invoices to clients and customers. They will manage all invoices to stay on top of late payments and ensure the business is being paid on time. 
  • Managing payroll: Bookkeepers can help process payroll by managing employee pay and staying on top of tax payments and documents for small business employees. 
  • Monitoring cash flow: Bookkeepers keep an eye on day-to-day transactions to make sure a business has enough funds to perform day-to-day operations. 
  • Closing books: Bookkeepers confirm accuracy by preparing a trial balance to ensure they’re ready for tax time. 

Advantages of working with a bookkeeper

Bookkeepers can benefit your business by freeing up more time in your schedule, minimizing financial errors, and generating accurate financial reports. Working with a bookkeeper can also help ensure your books stay clean and up to date so you’re always ready when tax season rolls around. 

Some key benefits of hiring a bookkeeper include: 

  • Not missing unpaid invoices and bills 
  • Staying on top of cash flow issues 
  • Making tax season easier 
  • Making getting a small business loan easier 
  • Giving you back more time to dedicate to your business

What is accounting? 

While accounting is similar to bookkeeping in that it involves documenting business financial transactions, the former process is more in-depth. It involves the summary, analysis, and interpretation of financial data

Accounting also involves reporting these findings to tax collectors and regulators. It’s a process that tells the financial story of your business, including if your business is profitable or if you’re suffering a loss.

Bookkeeping is a foundational aspect of small business accounting. Since accountants use the information gathered by bookkeepers to prepare larger financial statements and reports, the accounting process wouldn’t be possible without the help of bookkeepers. 

What does an accountant do? 

Accountants use bookkeeping records to assess big-picture finances and make smart business decisions. They also provide insights about the company’s overall financial health to business owners and other stakeholders.

In general, an accountant’s role requires higher expertise and education. This individual usually holds an accounting degree and is registered as a certified public accountant (CPA). To use that title, CPAs must pass the CPA exam—which is a highly valued credential in the accounting industry.

Common accountant responsibilities include: 

  • Overseeing a bookkeeper’s work: Accountants help ensure the accuracy of a bookkeeper’s work, catch any discrepancies as they arise, and review accounting transactions within the books.
  • Managing the bookkeeping process: Accountants make corrections to any clerical errors on the bookkeeping side and use these records to forecast a business’s health.
  • Generating financial statements: Accountants make adjustments to the trial balance and generate the income statement, balance sheet, and cash flow statement.
  • Performing financial audits: Accountants perform audits to analyze and verify all of a business’s financial records and statements. 
  • Preparing tax returns: Accountants produce the financial reports required to generate tax returns. During tax season, your accountant may produce the tax filings and send them to the IRS or work with a CPA firm that provides this service.
  • Helping businesses understand their finances: Accountants can help businesses understand where their money is going and how to interpret the financial data provided. This can help businesses make smart financial decisions. 

Advantages of working with an accountant 

Most importantly, your accountant is a valued advisor who can help you with important decision-making. If you’re considering purchasing new equipment or taking out a line of credit, for example, your accountant can help you determine the financial ramifications your decision can have.

Some key benefits of hiring an accountant include: 

  • Preventing and reducing tax penalties and errors 
  • Helping you understand the financial health of your business 
  • Aiding in the growth of your business 
  • Saving you time and money 
  • Helping you understand tax laws and regulations in your state 

The main differences between a bookkeeper and an accountant

Knowing the difference between bookkeeping and accounting can be tricky, especially with the interchangeability of the terms and how the duties can overlap. Here are a few key differences between bookkeeping vs accounting. 


The largest difference between accounting and bookkeeping roles is the required credentials, or academic qualifications, for each. 

Bookkeeper credentials:

  • Bookkeepers aren’t required to have any specific certification or formal education
  • Bookkeepers must understand basic and key financial topics and have an eye for accuracy
  • Bookkeepers must also have basic skills such as organization, communication, and attention to detail 

Accountant credentials:

  • Accountants must have a bachelor’s degree or higher in the field of accounting or finance.
  • Accountants can attain professional certifications to grow their careers and earn a higher income, such as a CPA title. 
  • Accountants must also have an eye for accuracy and attention to detail as they oversee a bookkeeper’s work

If you already use specific tools to manage your books, you’ll want to discuss those tools with any bookkeepers or accountants you consider working with to ensure they’re familiar with them. 


As discussed above, the main objectives of accounting and bookkeeping are similar but still different in many ways. Both disciplines work hand in hand to determine the financial health of a business. Below are the main objectives of an accountant vs a bookkeeper.  

Bookkeeper objectives:

  • Record transactions
  • Maintain ledgers 
  • Detect any fraud or discrepancies

Accountant objectives:

  • Review the financial records that the bookkeeper prepared
  • Analyze financial records to determine if funds are being misused or misallocated
  • Analyze and report the financial information to all appropriate departments, institutions, and stakeholders within the organization

Skill sets 

Bookkeeping and accounting also require different skill sets for each role, and while these skills can certainly overlap, there are some notable differences:

  • Mathematics: Both bookkeeping and accounting include daily basic mathematics operations like addition and subtraction; however, accounting involves more complex operations such as percentages, ratios, and exponents.
  • Detail: Both roles require great attention to detail. A bookkeeper’s job is to ensure that a business documents its records correctly for the accountant to analyze. Accountants not only need to ensure that the information the bookkeeper provides is correct, but they also need to be able to identify any inconsistencies or issues within the reporting.
  • Problem-solving: Bookkeeping and accounting both require expert problem-solving skills. While bookkeepers need to be able to find discrepancies within reporting, the accountant must be able to resolve any issues and come up with solutions.


On average, a bookkeeper is usually less expensive to hire than an accountant. This is because an accountant’s responsibilities are usually more complex. However, the cost for both a bookkeeper and an accountant can differ based on things like: 

  • The average market price: How much a bookkeeper or accountant charges based on the area you live
  • What services you need: What services you’re requesting and how much time it will take to complete these tasks 
  • The complexity of services: How challenging or complex your financial records are and if they’ll need more time to complete 

Both bookkeepers and accountants may charge a flat rate or, more commonly, by the hour. 


This article originally appeared on the Quickbooks Resource Center and was syndicated by

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5 tips for organic business growth

5 tips for organic business growth

It’s no secret that startups have a prodigious failure rate. In fact, according to a recent study, the four-year survival rate for a startup is just 49%.

With demoralizing stats like this in mind, entrepreneurs may be tempted to grow their profits through any means necessary, including inorganic strategies like acquisitions or mergers. However, the truth is that business owners can achieve impressive growth through organic strategies as well, allowing them to retain control of the companies they built from the ground up.

Also known as “true growth,” organic growth refers to the process of growing a business by reducing costs and increasing sales, either by finding more customers or enhancing output to current clients. On the other hand, inorganic growth occurs when a company merges with or is acquired by a second business. Entrepreneurs should take the time to familiarize themselves with the advantages of organic and inorganic growth, as well as some of the top strategies for execution, so they can decide which is the best choice for their business.

As a new business owner, you’ll likely want to increase profits as quickly as possible. By employing inorganic strategies like mergers and acquisitions, startups can grow their businesses more quickly while taking advantage of resources such as stronger credit lines and expanded market resources. Additionally, joining with another company lets you take advantage of its expertise and experience in the industry to develop your own brand.

By merging with another business, you agree to hand over some of your control and equity to another company. Not only can your initial vision become diluted, but you may also be forced to take on new business and managerial challenges before you’re truly ready. In some cases, you may have to rush to grow your staff and production capabilities to keep up with demand.

On the other hand, organic growth techniques allow you to grow your business on your own timeline. Because you aren’t sharing control with another company, you can hire employees and expand sales at your own pace. Additionally, entrepreneurs who maintain their autonomy now can sell for a larger profit later when the company is fully developed.

While retaining control of your company offers many advantages over the long haul, it can make business growth challenging in the short term. Some entrepreneurs struggle to grow beyond their current marketplace, while others find themselves cut down by the competition. Additionally, new businesses must often fight to make ends meet from month to month. Fortunately, strategies exist to help startups grow their profits without handing over control to partners or investors.

Here are just a few of those strategies to help you grow your business organically:

Want to grow a business that will feed your family and employees for years to come? The first step on the road to entrepreneurial success is starting the right kind of company.

With home-based and e-commerce businesses, you can avoid expenses like rent and commuting during the early, lean years of your company. As an added bonus, working out of the home lets you write off parts of your mortgage and electric bill. You can then invest these savings back into the business to help you grow in the long term.

A common conundrum for new business owners is whether to take your full cut of the profits or invest the money back into your company. While you may be tempted to keep some of those hard-earned dollars for yourself, you should aim to reinvest gross profits whenever possible to help your business grow. Investing your own money shows prospective clients and lenders that you are confident in your company’s long-term potential.

Not sure where to put profits? When in doubt, invest in marketing, SEO and other tactics likely to generate more business for your startup. If your income permits it, you may also want to invest in employee training and technological improvements, as these can yield large profits down the line for your company.

No matter how happy your current clients are with your offerings, you will have trouble growing your business organically if you don’t put effort into finding new sales channels. If you don’t currently sell your goods online, you should definitely consider starting a website to expand your reach to other regions. Additionally, you can introduce new products, cross-market services to your existing clients and expand to different markets. For example, a company that specializes in SEO may want to expand its services to include social media and search engine marketing.

Finally, business owners should employ market segmentation to customize their strategies according to the specific channels they are leveraging and the specific markets they are trying to reach. This way, you can create unique campaigns based on customer location and demographics and watch your sales rates skyrocket.

As a new business owner, you may feel the urge to micromanage everything that happens at your company. However, the truth is that macro-management is a far more effective way of enabling organic growth for your startup.

To keep your company moving forward, you should train top employees to take over some of your daily responsibilities. While you may be tempted to keep costs down by hiring employees who will work for less, in the long run these staff members could end up costing you more if their efforts aren’t up to par. Find people you can trust to get the job done—even when you’re not around—so you can focus on growing and developing your business in the years to come.

From minimizing spending, to reinvesting profits back into the business, organic growth strategies help ensure that you will retain control of the company you worked so hard to build. Do your research, and consider all the growth strategies available in order to give your business the best shot at success.

Do you know how sales taxes are impacting your bottom line? Check out our sales tax calculator.

This article originally appeared in the QuickBooks Resource Center and was syndicated by

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