As a business owner, you may find that you use the terms “bookkeeping” and “accounting” interchangeably, and you hear others do the same, too. However, at Citizen Accounting, we want you to know that these are two distinct processes that play a critical role in managing the finances of your business. Knowing the difference between bookkeeping and accounting can help you avoid costly financial mistakes and help you make smarter decisions.
Bookkeeping refers to the process of recording your operation’s daily financial transactions. Your bookkeeping operations should include tracking invoices, receipts, payments, expenses, and income. Every financial move your business makes should be categorized correctly and documented. While this seems simple in theory, proper bookkeeping forms the foundation of your company’s financial records and helps maintain accuracy in areas like expense tracking and bank reconciliation.
In comparison, accounting takes things a step further. During the accounting process, we take the information you provide through bookkeeping and analyze, interpret, and summarize it. The role of an accountant includes preparing financial statements, handling tax planning and filing, and offering strategic financial advice. To sum it up, accounting is designed to help you understand the “why” behind your business’ numbers and use this information to plan for the future.
We proudly offer both accounting and bookkeeping services to help your business stay on track financially. For more information about either of these services or to set up a consultation with a member of our team, contact us today.