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When most people think about the difference between bookkeeping and accounting, they find it difficult to distinguish between the two processes. While bookkeepers and accountants share common goals, they support your business in different stages of the financial cycle.<\/span><\/p>\n Bookkeeping<\/a> is concerned with recording financial transactions and is more transactional and administrative. Accounting is more subjective, based on bookkeeping data, providing insights into your company’s financial health.<\/span><\/p>\n In this guide, we’ll clarify the functional differences between accounting and bookkeeping and the roles of bookkeepers and accountants.<\/span><\/p>\n Bookkeeping<\/a> consistently records daily transactions and is an important component of acquiring the financial information required to manage a successful business.<\/span><\/p>\n Bookkeeping is comprised of the following:<\/span><\/p>\n One of the most important aspects of bookkeeping is keeping a general ledger. The general ledger is a basic document in which a bookkeeper records the sums received from sales and expenses. This is known as posting. The more sales performed, the more frequently the ledger is updated. A ledger can be made using specialist software, a computer spreadsheet, or a lined sheet of paper.<\/span><\/p>\n The complexity of an accounting system is frequently determined by the size of the firm and the amount of daily, weekly, and monthly transactions. All sales and purchases your company makes must be documented in the ledger, and certain goods require accompanying documentation. On its website, the IRS specifies which business transactions require supporting documentation.<\/span><\/p>\n Read more: 9 Best Bookkeeping Practices for Small Businesses<\/a><\/p>\n Accounting<\/a> is a high-level process that produces financial models using financial data acquired by a bookkeeper or business owner.<\/span><\/p>\n Accounting is a more subjective process than bookkeeping, which is primarily transactional.<\/span><\/p>\n Accounting<\/a> is comprised of the following:<\/span><\/p>\n Analyzing financial data to assist you in making company decisions is an important element of the accounting process. As a result, you’ll have a greater knowledge of your company’s true profitability and cash flow. Accounting transforms information from the general ledger into insights that highlight the wider picture of the business and the company’s growth. Business owners frequently seek accountants to assist with strategic tax planning, financial analysis, forecasting, and tax filing.<\/span><\/p>\n<\/span>The Function of Bookkeeping<\/span><\/span><\/h2>\n
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<\/span>The Function of Accounting<\/span><\/span><\/h2>\n
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