What is the difference between bookkeeping and accounting?

Bookkeeping and accounting are both important parts of managing your finances. At first glance, the two can seem quite similar, but there are a few main differences.

Bookkeeping focuses on recording and organising financial data. Accounting is the interpretation and presentation of that data to business owners and investors.

Bookkeeping typically consists of:

  • payroll

  • invoicing

  • receipts and bills

  • recording business transactions.

Accounting typically consists of:

  • financial statements and reports

  • budgets

  • tax returns

  • analysing business performance.

The tasks that bookkeepers and accountants do vary between businesses. Bookkeepers working for smaller businesses might do some basic accounting duties. There’s often overlap, and the duties may change a lot from one business to another.

 

Related terms:
What is accounting software?
What is business accounting?
What is financial management?

Related Xero feature:
See how business is going with the dashboard

Related Small Business Guides:
When you should hire a bookkeeper
What does an accountant do?

Accounting Terms

Accounting terms and how-tos for beginners. Let us walk you through all the basics that you need know.

What is the difference between bookkeeping and accounting?

Bookkeeping and accounting are both important parts of managing your finances. At first glance, the two can seem quite similar, but there are a few main differences.

Bookkeeping focuses on recording and organising financial data. Accounting is the interpretation and presentation of that data to business owners and investors.

Bookkeeping typically consists of:

  • payroll

  • invoicing

  • receipts and bills

  • recording business transactions.

Accounting typically consists of:

  • financial statements and reports

  • budgets

  • tax returns

  • analysing business performance.

The tasks that bookkeepers and accountants do vary between businesses. Bookkeepers working for smaller businesses might do some basic accounting duties. There’s often overlap, and the duties may change a lot from one business to another.

 

Related terms:
What is accounting software?
What is business accounting?
What is financial management?

Related Xero feature:
See how business is going with the dashboard

Related Small Business Guides:
When you should hire a bookkeeper
What does an accountant do?

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