Accounting is the department responsible for all matters related to the financial position of the business. The concept of ‘bookkeeping’ is a bit different from ‘accounting’ because bookkeeping is more focusing on transactional level and ensure each financial transaction is handled accurately on a daily basis. ‘Bookkeeping’ is simply a method of recording all financial transactions in the books so that information about day-to-day transactions is passed on to the accounting department. ‘Bookkeeping’ is not responsible for accounting analysis or understanding of taxes or other significant financial matters.
Think of ‘bookkeeping’ as keeping the books. When a person comes to your store to make a purchase, you record the transaction on a ledger, this is called ‘bookkeeping.’ All the smallest transactions must also be recorded for the accounting department to work effectively. ‘Bookkeeping’ usually refers to accounting software that includes various types of ledgers. This ledger system helps you keep track of the incoming and outgoing cash flows of your business.
Bookkeeping is the first step of accounting. It helps to turn operation transactions into financial transactions. It helps to create a journal of a business and from there, accountants and decision makers can perform their financial requirements.
Without bookkeeping services, accountants won’t be able to file tax returns, business owners won’t be able to do any financial analysis to know now to improve the business’s profitability.