Accounting is the year-end management of the financial transactions and tax returns. Bookkeepers and Accountants usually communicate and work together to give you the best outcomes and to keep the records accurate.īelow is the official meaning of the two practices that every student learns when being trained as Bookkeepers or Accountants:īookkeeping 101- Summary 2 : Bookkeeping is the day to day management of the business and financial transactions. Some accountants will do day-today bookkeeping. Sometimes there is a cross-over of duties depending on the professional’s set-up. They can also give you advice on how to increase your profits. The Accountant can analyze your numbers in depth and make sure you are getting the best taxation benefits. Chartered Accounts (CPAs) focus on taking the information from the Bookkeeper to prepare your end of year Financial Statements which fall in line with GAAP principles and taxation laws, and they file tax returns. Here is the difference between the two professions: Professional Bookkeepers are good at helping you run your day to day bookkeeping procedures, producing monthly Management Reports and advising you of the best day to day practices to help increase your profits. The two words are often used interchangeably meaning you could be doing your bookkeeping but if you say to someone that you are accounting, it can mean the same thing. For example, the calendar year is January to December but for tax purposes your financial year may run from April to March.Ģ. The financial year may be different to the calendar year. When you are self-employed and working to make money, you are in business – try to familiarize yourself in saying that rather than just “I work for myself” or “I freelance”.Įvery self-employed person carries out working activities to try and make money.īookkeeping is the process of recording all the transactions resulting from those working activities.Įach transaction must be identified as to what type it is, example Income or Expense.Įach transaction has a financial component so once this amount is known (from a document like a receipt or invoice) it is ready to be recorded.Įach transaction is recorded into the system in the identified category (called an Account) using the known amount.Īfterwards, reports can be produced that show the affect of all the money coming in and going out.Ī bookkeeping cycle runs for one financial year made up of 12 months each year.
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