What is Bookkeeping?
Bookkeeping is the process of keeping records of the financial affairs of a business.
It’s an important part of the process of accounting, and comprises of tasks such as:
✓ Maintaining the general ledger.
✓ Tracking accounts payable and accounts receivable.
✓ Recording financial transactions.
✓ Recording debits and credits.
✓ Creating invoices.
✓ Managing payroll.
One of the key components of bookkeeping is maintaining a general ledger, which is a record used to sort, store and summarise a company’s transactions.
Depending on the size of your business and the number of transactions that are completed, the complexity of your ledger can vary from spreadsheets to accounting software.
What is Accounting?
Accounting is the process of recording, interpreting, analysing and reporting of financial information.
While bookkeepers are involved in the initial stages of the process—which serves as the foundation of the entire accounting cycle, accountants are involved in all steps of the process. Additionally, accounting is more subjective, whereas bookkeeping is more focused on objective financial tasks.
Typical accountancy tasks include:
✓ Helping small business owners understand the impact of financial decisions.
✓ Completing income tax returns.
✓ Preparing financial statements.
✓ Interpreting data to determine the financial health of the business.
✓ Analysing costs of operations.
The process of accounting generates reports that convey important financial information.
Business owners often look to accountants for help with the company formation process, financial forecasts, tax compliance and tax planning, tax filing, business loan applications, strategic planning & to have a better understanding of the profitability and cash flow.