What is the difference between bookkeeping and accounting?
Bookkeeping records transactions. Accounting interprets those records to help you make decisions and file taxes.
A bookkeeper categorizes expenses, reconciles bank accounts, and makes sure your books are accurate and up to date. They handle the day-to-day data entry and monthly close.
An accountant or CPA takes those clean books and prepares tax returns, gives you financial advice, handles audits, and helps with business strategy. They need accurate books to do their job well.
Most small businesses need both. A bookkeeper keeps your records current throughout the year. Your CPA uses those records to file taxes and give you advice on minimizing what you owe.
You can’t skip bookkeeping and expect your accountant to figure it out at tax time. That costs more and usually results in missed deductions because nobody documented things correctly during the year.
More Questions
Do bookkeepers do taxes?
Some bookkeepers prepare tax returns, but most focus on keeping your books clean so your CPA can file your taxes efficiently.
Read answerHow long does bookkeeping cleanup take?
Most cleanups take two to four weeks depending on how many months you're behind and how messy the books are.
Read answerDo I need a bookkeeper?
If you're spending hours on your books, falling behind on monthly close, or making decisions without real numbers, you probably need a bookkeeper.
Read answerShould I use cash or accrual accounting?
Most small businesses under $5M in revenue use cash basis because it's simpler and matches cash flow. Accrual is required for larger businesses and inventory.
Read answerDo I need separate books for each business?
Yes. Each legal entity needs its own books. Mixing entities creates tax problems and pierces the liability protection that separate entities provide.
Read answerHow often should bookkeeping be done?
Bookkeeping should be done monthly at minimum. Weekly is better for high-volume businesses. Waiting longer than a month means errors compound and records get forgotten.
Read answerDFW's Trusted Bookkeeping Firm
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