Bookkeeping and accounting are essential for small and medium sized businesses, ensuring that they are financially compliant, successful and have opportunity for growth. Many people, however, get confused about the difference between bookkeeping and accounting which is why we created a guide to help you understand the difference between the two as well as explaining why both bookkeeping and accounting are essential for your business.
Bookkeeping vs Accounting
Bookkeeping and accounting are different; however, bookkeeping is a key element that is required in order to produce accounts.
Bookkeeping normally refers to the daily running of a business’s financial records. Bookkeeping normally includes things such as recording receipts and business transactions, data entry, invoices, paying suppliers and employees, and reconciling bank statements.
Accounting on the other hand refers to the analysing, interpretation, reporting and summarising of the information the bookkeepers have collected. Accounting normally includes things such as financial statements and reports, budgets, tax returns and analysing business performance.
Both bookkeeping and accounting entail management of financial data. However, bookkeeping is often regarded as being more administrative and refers to how such data is collected and stored. While accounting refers to the understanding of this information for financial forecasting and to advise business decisions.
Why is bookkeeping and accounting beneficial for my business?
Both bookkeeping and accounting can be extremely beneficial for small and medium sized businesses. The reports produced by bookkeepers give you valuable financial information which give you greater insight into how your business is performing. Also, if you choose to do your own bookkeeping and do this inaccurately it can cause issues with HMRC and you may be subject to fines and penalties.
Accountants can be extremely beneficial for small and medium sized businesses as they have a stronger knowledge of tax and legislation. Accountants examine the financial information from your accounts in order to verify accuracy, evaluate if the business is profitable and offer strategic recommendations for your business. Having an accountant’s input can be extremely beneficial if you want advice on things like what to do about asset management, tax and expenses, whether to bring on new staff, and establish where savings can be made.
Traynor Accounting can help with both bookkeeping and accounting
Traynor Accounting Cumbernauld and Glasgow provide both bookkeeping and accounting services to small and medium sized businesses throughout Scotland and the UK. With our Chartered Management Accountants and experienced bookkeeping team you know your bookkeeping and accounts will be in safe hands. You will also be allocated your own dedicated bookkeeper and accountant, meaning that they will have a good understanding of your business and therefore be able to help you run the most successful business possible.
To find out more about our bookkeeping and accounting services give us a call today on 01236 222668 for your free accountant consultation (no obligation!).