Demystifying Bookkeeping Vs. Accounting: The Differences

Bookkeeping and accounting services in the Philippines are two essential components of financial management. Bookkeeping primarily involves the systematic recording and organizing of financial transactions, ensuring accuracy and completeness. Accounting, on the other hand, goes beyond bookkeeping by analyzing, interpreting, and summarizing financial data to generate meaningful reports and provide insights for decision-making. To delve deeper into these crucial aspects of managing finances, explore their intricacies and the impact they have on businesses and individuals alike.

What Bookkeeping Entails

Bookkeeping involves day-to-day tasks such as organizing, recording, and tracking the financial details of your business. It makes sure to properly and accurately record your business’s figures and dates, as well as categorize each according to purchase, sale, receipt, and payment. According to a survey, 64% of small business owners do bookkeeping themselves through cloud-based accounting software.

In bookkeeping, you will need to review and record your business’s daily transactions, account receivable, account payable, bank statements, income statements, and balance sheets.

This is a way for you to prepare your business accounts and a step to a holistic accounting process. You should be able to spot any small or hidden mistakes or errors that may affect your business. If you do not do your tasks right and properly, other accounting tasks will be difficult to do.

You do not need to have a bachelor’s degree for this job. You only need to take classes that are related to finance in college but even that is not necessarily needed. 

The Nuances of Accounting

Accounting is recording, analyzing, interpreting, and presenting systematically the financial data of your business. This job requires logic and problem-solving skills compared to bookkeeping. Bookkeeping organizes and makes sure the financial records are accurate and accounting draws conclusions from those business finances. According to a survey, only 30% of small business owners work with an accountant and cited that accountants are the advisors that they deemed the most important.

If you are an accountant, you can provide tax services in Manila. You will need to optimize the business’s tax returns, find new ways of deducting tax, prepare and file taxes, recognize and spot problems, maintain cash flow, and identify areas and opportunities for growth.

Part of your job requires a specialty that helps you look at the big picture of the finances of businesses and be able to make good and sound recommendations. You are qualified to make financial statements for employees and investors. Making budgets, helping in planning, and giving tax advice is also part of your job. Your strength is to recognize a problem before it becomes a bigger problem that will negatively affect the business.

This job requires a bachelor’s degree in college. It is best if you are a graduate of Bachelor of Science in Accountancy and passed the board exam. Being a CPA or a certified public accountant will give you more global opportunities and also allow you to work in different industries.

Bookkeeping vs. Accounting

The primary difference between the two is that bookkeeping is more of an administrative task while accounting is a job that requires more logic and problem-solving. Bookkeeping services in the Philippines maintain a day-to-day financial record which is the first step in a holistic accounting process. On the other hand, accounting is a periodic task and is a systematic and subjective view of the business’s financial records. Accountants analyze the financial records and recognize issues and opportunities for the business to grow. 

Bookkeepers don’t need to have a bachelor’s degree while accountants need to. Bookkeepers need to be keen on details, organized, and meticulous. Accountants need a bachelor’s degree and are required to know tax law. They also need to know how to use bookkeeping software. Accountants can be bookkeepers but bookkeepers cannot be accountants unless they have a legit and proper certification.

Can you do your bookkeeping and accounting for your own business?

You can do your bookkeeping if you are willing to. It’s best to have a background in accounting but it is not required. You need to make sure it is part of your schedule. You may do it in Excel, a bookkeeping software, or you can employ a bookkeeping service. 

If you are a small business owner, you can do your accounting. Hiring an accountant though is better for small business owners like you if you have a complex organizational structure. The latest tax laws and regulations may be too complex for you to implement on your own so having CPAs who are trained in that area will be a great advantage for you and your business.
Understanding the difference between the two is crucial. Hiring any of the two or both will greatly help in the success of your business. If you need assistance, don’t hesitate to call our team. We provide bookkeeping and accounting services in Pasig and beyond. You can take advantage of our free 30 minute consultation to help you get started.