There's often a misconception amongst those outside the world of financial services that both the practice of book keeping and accounting are one in the same. The need for accounting services is often deemed unnecessary with preference given to having an in-house book keeper to serve the
needs of small businesses.

While both practices play a significant part in the financial activity of all businesses, it is the latter that plays the most significant role in influencing business decisions. This article looks to clear up this confusion and highlight the key differences between the two processes with an emphasis on the importance of getting sound tax advice.

Put simply, the differences between the two can be defined as follows; bookkeeping is the process of recording and generating data of a company's day to day transactions whereas accounting is the high level analysis of that data collected.

Role of the Bookkeeper

Bookkeeping is the initial step in gaining a clear picture of the businesses financial health. The following components give an overview of the key factors that make up a bookkeepers role:

• Recording financial transactions
• Producing sales invoices, receipts and payments
• Maintaining and balancing subsidiaries, general ledgers and historical accounts
• Payroll duties
• Looking after financial paperwork and filing 

Role of the Accountant

The function of accounting is a high level process that gathers key financial indicators from the bookkeepers work. The data is then processed using Generally Accepted Accounting Principles into reports. These reports are used by a variety of people. Cornish & Associates Ltd uses these reports 90% of the time for Taxation work and compliance. The reports are also used for Banking and borrowing purposes as well as company management. The functions include but are not limited to the following: 

• Preparing adjusting entries
• Preparing and analysing company financial statements
• Analysing costs of operations
• Completing income tax returns
• Offering financial advice

In summary, whilst both roles share a varying degree of fiscal responsibility the need for sound financial advice from a certified Accountant is paramount. This sentiment is particularly important in the field of tax accounting, where changes to legislation and regulations can have significant implications in business. Having proficient taxation knowledge is critical in minimising tax obligations, maximising taxation benefits and improving overall cashflow.

So to ensure your businesses sustained financial growth, be sure to seek out the appropriate advice from professionals in the know.