Both bookkeeping and accounting are essential to your business – and best practices in each are essential to your business’ success!  But, even though commonly used interchangeably, they are different – each one serves its own distinct purpose when it comes to managing a company’s financial records. Bookkeeping is all about tracking financial transactions, while accounting involves analyzing those transactions to make informed business decisions.

While both require precision and attention to detail, accounting is reliant on bookkeeping results. This means that bookkeeping errors, omissions, and inaccuracies carry over into the overall financial status and analysis generated by accounting.  That’s why best practices in accounting are dependent upon best practices in bookkeeping.  

This Best Practices series is designed for you to take a moment to learn exactly what each is, and why individually and combined, these two processes, specializations, and professional skill sets are critical to your company’s growth, profitability, and success.

What is Bookkeeping?

Bookkeeping is tracking, recording, and storing all of a company’s financial transactions. This includes recording daily business activities like purchases, expenses, sales, and receipts in journals and ledgers. A bookkeeper maintains accurate records to make sure all financial transactions of the business are in order and current.

What is Accounting?

Accounting is the process of organizing, analyzing, and interpreting financial data to provide insights that help businesses make sound financial decisions. Accountants use the information provided by bookkeepers to prepare financial statements, such as income statements, balance sheets, and cash flow statements. These statements show the overall financial status of the business and help owners and managers streamline operations, make investment decisions, and plan budgets.

Unlike bookkeeping, accounting requires trained professionals to analyze financial data and provide insights. Accounting requires an in-depth understanding of tax laws, auditing, and financial management policies. An accountant is vital for reviewing budgets, analyzing financial statements, and lending insight and guidance to business owners on how to improve their bottom-line.

A Brief Word about Accounting Software

Accounting software – when it’s the best fit for the business – is the growth engine that can help a struggling company become efficient and profitable and elevate a profitable company to the next level. By automating and integrating the wide range of accounting tasks and functions required of the business, accounting software and its accessories allow companies to free up resources, avoid duplication of efforts and gain panoramic visibility of their entire business.

Call Accounting Business Solutions by JCS – (800) 475-1047 – or complete and submit the Contact form today. Take a minute to learn how your company can benefit from applying best practices to the best accounting software for your business.