What’s the Difference Between Bookkeeping and Accounting?

Updated: Nov 11, 2020

Ever scratched your head wondering where on earth bookkeeping end and accounting begins? Well, you're in the right place. In this blog, we're going to guide you through the key differences between bookkeeping and accounting so can feel confident investing in the right services for you and your business.

Both bookkeeping and accounting are essential pillars to the financial success of a business, but perform two slightly different roles:

Bookkeeping

Bookkeeping focuses on keeping an accurate track of money coming in and going out of a company. It is all about day to day cash flow, keeping finances on track.

In recent years, bookkeeping software like our much loved Xero has allowed business owners to reclaim back time otherwise spent keeping books. At the click of a couple of buttons on a smartphone, you can easily access and update your financial data from anywhere in the world. This is key in allowing us to focus on accounting which is all about the bigger picture.

Accounting

Essentially, bookkeeping is the first part of the broader accounting process. The next steps of accounting are summarising, analysing, consulting and reporting on the records produced during the bookkeeping process.

Accounting is all about taking the data produced during the bookkeeping process and interpreting the results. It's bigger picture stuff, looking at carrying out audits, generating financial statements and planning for business growth. Accounting is sometimes referred to as 'the language of business' as it's such a fundamental part of a successful business.

Unlike bookkeeping, a good accountant requires special skills and experience to best interpret the data produced from bookkeeping.