Wednesday, 28 Sep 2022
Many of us mistake equating bookkeeping with accounting or using the terms interchangeably. However, these are two different functions performed by businesses to keep their finances managed. Companies in Melbourne hire two different professionals for these roles because of their unique responsibilities.
The primary similarity between the two job functions is that they are a part of the finance department. However, the work involved in each of them is different. While bookkeeping entails accurate and error-free recordkeeping, accounting revolves around data analysis and interpretation to offer business owners financial advice.
They have defined roles and responsibilities in an organisation, and some key differences set them apart. Here is a list of such differentiating factors that aid in quickly identifying their importance for businesses.
A bookkeeper is responsible for recording all the transactions taking place in a business. These entries are chronologically organised and consistently maintained to keep the books updated and accurate.
The bookkeepers keep track of the accounts receivable and accounts payable at all times. They follow the money that the business in Melbourne owes to the suppliers and the money that the customers owe for the invoiced products.
In a nutshell, bookkeeping is the steppingstone to starting the accounting work for a business. Thus, the work of the accountant is dependent on the data prepared and organised by the bookkeepers.
An accountant is involved in using the financial data recorded and collated by the bookkeeper for drawing inferences. They prepare reports and statements that give an insight into the financial health of the business.
These include the cash flow statement, balance sheet, and income statement. They help the business owner to make sense of the enormous data accumulated by the experienced bookkeeper Melbourne and avoid losses. The work of the accountant begins where the duties of a bookkeeper end.
Let us look at the factors that separate them from each other when being implemented in a small business in Melbourne.
Bookkeepers record and classify the daily incomings and outgoings. They send invoices to customers and make timely bill payments to vendors. They reconcile bank statements and make sure the salaries are paid through payroll management. They are responsible for managing the required levels of inventory at all times.
An accountant is bestowed with the duty of adjusting entries and assessing expenses. They help entrepreneurs in Melbourne to make informed financial decisions based on their assessments and reports. They look into the statements and create estimates and cash flow projections. They conduct audits and file taxes with effective planning and compliance.
Bookkeepers need to complete accredited vocational education and training (VET) courses in Melbourne to become qualified for the role. The most common bookkeeping courses include Certificate IV in Accounting and Bookkeeping or Diploma of Accounting. If they wish to offer BAS services to clients, they need to register as a BAS agent and acquire Professional Indemnity Insurance.
Accountants must have a bachelor’s degree in accounting. Accountants working in an international organisation should be a Chartered Accountant (CA) or Certified Practising Accountant (CPA).
Those who wish to become highly qualified in the industry acquire Master of Professional Accounting degree. Thus, accountant need more knowledge than bookkeepers in Melbourne because they have to do analysis and assessments.
The records created by the bookkeepers do not have sufficient information that can help in decision making.
The financial statements prepared by the accountants have a lot of information about the profitability and revenue of the business. It helps the business owner in Melbourne to make quick decisions based on a rational approach.
The purpose of bookkeeping is accurate and up-to-date recordkeeping. In contrast, the purpose of accounting is to determine the financial status of the business and provide counsel to the entrepreneur.
Bookkeeping is required to prepare the input for accounting, and the result of accounting is making the business in Melbourne financially stable through effective planning, spending, and investing.
The methodologies used for bookkeeping are predefined and follow accounting standards. Conversely, accounting is about analysis and interpretation, which can be done by the accountant through any methodology.
Bookkeeping is a vital task that ensures the recording of all transactions systematically for assessments. Accountants carry forward the results of the bookkeepers to develop a financial strategy that aids in growing the business and avoiding financial challenges. They need to work as a team in a cooperative manner to ensure the success of the business.
Thus, both are needed by every organisation. However, many small businesses in Melbourne utilise bookkeepers as accountants to save money. It works for smaller organisations, but large businesses need separate professionals to handle the workload.
