Small businesses live and die by their cash flow and accountability. Accurate recordings of transactions, coupled with proper assessment and processing, give small business owners a firm base on which to make decisions and create plans for growth.
Recording and understanding the sales, expenses and other basic business data should be easy enough for small business owners. But understanding the accounting needs of a business is not always so simple. What type of activity is considered bookkeeping, and when do you need an accountant instead? Is there even a difference between the two?
There is, and it is a simple but important one: Bookkeepers record a company’s day-to-day transactions, while accountants verify and analyze that information.
Bookkeeping versus accounting
A bookkeeper’s territory is daily financial transactions, which include purchases, receipts, sales and payments. Recording these items is usually done through a general ledger or journal. Many small businesses use software such as QuickBooks or Peachtree to keep track of their entries, debits and credits. Their efforts culminate in a trial balance, which means the final total of debits and credits match.