The IRS increased its audit rates in 2022. It increased investigations into the financial activities of businesses at almost every level. Certain income brackets saw their audit rates double in seven months.
Fortunately, an IRS audit doesn’t have to cause a problem. As long as a company’s financial records are in order, it’s easy to pass the agency’s scrutiny.
To pre-empt an audit, many businesses hire professional accountants or bookkeepers. Which one is right for you?
To make that decision, weigh the merits of bookkeeping vs accounting. Keep your company’s unique needs in mind.
Bookkeeping Vs Accounting: Overview
Bookkeepers and accountants have similar jobs. But, their differences are critical.
Bookkeepers keep records. They maintain a business’s key financial documents.
Accountants have their eyes on the big picture. An accountant may create financial statements. They regularly review and analyze the financial information bookkeepers record.
What Is Bookkeeping?
Bookkeeping is financial record-keeping. Bookkeepers record the minutia of business transactions. They also maintain records.
Bookkeepers do not need any formal training or degree. They do need a sharp eye for detail. Often, a bookkeeper begins work straight out of high school.
What Is Accounting?
Accounting is financial record maintenance, inspection, and analysis. Accountants must have a Bachelor’s degree in Accounting or Business.
Public accountants and certified public accountants (CPAs) need to pass a licensure exam. CPAs are eligible for a wider range of jobs than PAs.
Similarities Between Bookkeeping and Accounting
Accountants and bookkeepers share a goal. Both want to improve a business’ finances. Both work directly with financial data. Both are responsible for ensuring tax compliance.
Accountants and bookkeepers both have a high degree of financial literacy.
Differences Between Bookkeeping and Accounting
Bookkeeping and accounting are, at their core, very different roles.
Bookkeepers are responsible for recording financial transactions. They must be on the alert for inconsistencies or errors.
Businesses may also assign bookkeepers detail-oriented tasks. They might record journal entries or bank reconciliations.
Many accountants began as bookkeepers. But, accountants have greater credentials.
Accountants are responsible for preparing financial statements. They also:
- Analyze a company’s financial documents
- Assess a company’s overall financial health
- Make adjustments to journal and ledger entries
- Provide tax advice
- Provide financial advice
- Complete and file tax returns on behalf of a business client
Tips, Tricks, and Guides
There’s no shortcut to successful accounting. For instance, consider these accounting tips and tricks for small businesses. They simply recommend best practices for tracking expenses.
Or, “tips” articles offer tricks for optimizing bookkeeping software tools. Excel tutorials are popular. Many are free on YouTube.
But for in-depth strategies, skip the brief bookkeeping tips. Look for professional guides.
Bookkeepers with a Certified Bookkeeper designation are competent. They can assure clients they can carry out all bookkeeping functions and tasks. The certification exam assessed their skills.
The American Institute of Professional Bookkeepers proctors the certification exam. The institute freely distributes its handbook. It functions as a compact bookkeeping study guide.
The American Accounting Association maintains a library of resources. Some are exclusively for members. But, others are available to the public. Browse all AAA publications online.
Bookkeeping Services and Beyond
Sterling Tax & Accounting has the expertise you need. We know how critical accurate financial management is to your business. Yet, no two businesses are identical.
That’s why we offer custom financial solutions.
Are you weighing the benefits of bookkeeping vs accounting? If you aren’t sure what’s right for your organization, contact our experts. We look forward to finding the services that suit your needs.
Learn how Sterling Tax & Accounting can add value to your business!
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