Put simply, accounting is the profession of analyzing, interpreting and communicating the financial information of a company or individual.
WHY IS ACCOUNTING IMPORTANT?
Accounting is important in determining whether your business is financially healthy.
An accountant will prepare financial statements and annual reports in order to plan and make informed financial decisions for your business. Your accountant should also advise you on your tax affairs and investment opportunities.
WHAT IS BOOKKEEPING?
Put simply, bookkeeping is the recording of your business’ daily transactions including purchases, sales, receipts and payments. Bookkeeping is an element of accounting.
Often bookkeepers do more than simply record your daily transactions. They can also be responsible for invoicing your clients, making payments to your suppliers, monitoring your individual business accounts and generating your financial reports.
WHY IS BOOKKEEPING IMPORTANT?
Bookkeeping is important for many financial aspects of your business, such as
- Managing your business’ cash flow.
- Evaluating the financial performance of your business.
- Preparing your tax return to hand over to your accountant.
- Helping plan your budgets.
WHAT IS THE DIFFERENCE BETWEEN A BOOKKEEPER AND AN ACCOUNTANT?
Bookkeepers and accountants work together to manage your business’ financial health.
A bookkeeper records your business’ financial transactions and hands them over to your accountant to verify and use to create financial reports. These reports and financial statements are used both internally for decision making and externally for HMRC’s records.