KPMG Spark Blog

Differences between Accounting and Bookkeeping

Picking up the skills of bookkeeping and accounting can be time-consuming and difficult. Understanding the difference can help you focus your spending on what is most necessary, what you can do yourself, and what KPMG Spark can help you with. Here, we’ve laid out the differences between bookkeeping and accounting so you can get back to your business and do the things you enjoy.

Starting your own business often starts with a passion. Whether it’s opening up your own beauty salon or opening up a clothing store, your business is yours and you should be able to work with what you love. Having the plan to be your own boss is great, however, we still have the finances to worry about - we want to make sure that we can make a profit from our dreams and goals! While starting and managing your business, there are a million things on your plate to keep you busy.

While the lines between bookkeeping and accounting are starting to blur,  both are essential financial functions and there are key differences that are important for any start-up or small business to be aware of. To put it simply, bookkeeping is the record-keeping that accountants utilize to analyze and record the financial results of the company. 

Bookkeeping Basics

The work of bookkeeping professionals is vital because it can affect so many different aspects of the business. 

Bookkeeping organizes a company’s data by keeping records of the financial affairs of a business. Every business needs to practice bookkeeping in order for leaders, accountants, lenders, and/or analysts to make future business and financial decisions. Bookkeepers typically do not make the financial decisions for the business but their work is essential for the decision-makers overseeing the business and accounting. Bookkeepers collect and organize record daily financial transactions. Because of the need for accuracy by the bookkeepers, an accountant often oversees their work. 

As we said above, the work of these bookkeeping professionals is so vital because it can affect so many different aspects of the business. Whether it is preparing tax returns for the Internal Revenue Service (IRS) and/or state and local taxing authorities, budgeting for the next year, presenting information to investors, or simply wanting to stay organized as a business owner, bookkeeping is an essential function for any business. 

Accounting

Accounting, compared to bookkeeping, takes a more directive role when it comes to finances. While bookkeeping keeps track of all financial transactions, accounting is where you take all this financial information and apply it to your business and make decisions accordingly. Accountants prepare tax documents and evaluate the financial standing of a business. Accountants also apply their skills to help the company manage its business - this can be, for example, by analyzing trends (increasing revenues or unusual expenses) or determining if one product line of a business is more profitable than another.  

This analytical process is an important part of accounting and is why extensive training and schooling is required to become a certified public accountant (CPA).  For a small business that has an employee with some accounting experience, it may be possible to handle the accounting functions in house. 

KPMG Spark

Where does KPMG Spark fit into this you might ask? Spark is dedicated to small business bookkeeping. While accountants are responsible for the entire accounting process, a bookkeeper is generally responsible for the recording and organizing process. Having your own bookkeeper for your business is valuable to help keep your records ordered so you can do more for your business and get back to why you started your business in the first place. Bookkeepers are also generally less expensive than accountants. By outsourcing your bookkeeping to Spark (which may be expensive than an in-house bookkeeper), you can have your records clear and organized and still make all your important business decisions. For larger businesses with many assets and resources, a dedicated accountant can be necessary—but for a small business, a dedicated bookkeeper is largely sufficient for its needs and generally more affordable than an accountant - that’s the value KPMG Spark brings to your business.

This blog article is not intended to address or provide advice concerning the specific circumstances of any particular individual or entity and does not constitute an endorsement of any entity or its products or services.

Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.

The following information is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.

KPMG SparkJune 14, 2020Posted In: Accounting Resources

KPMG Spark is an online accounting service that saves you time so you can focus on what’s most important for your business.

3 ways that having a human bookkeeper can make your life easier

Hiring a trained bookkeeper ensures that your money is being managed correctly and that nasty surprises don’t catch you off guard.

Ben AsplundJanuary 12, 2021Posted In: Business Tips

Frequently Asked Questions about KPMG Spark

Wondering what KPMG Spark is all about? Here, we have put together some of the most frequently asked questions we get at KPMG Spark to help you navigate your online bookkeeping experience.

Ben AsplundJanuary 5, 2021Posted In: Business Tips

3 Bookkeeping Leading Practices

Whether you get your bookkeeping done with a professional—as you get with us at KPMG Spark—or you do it all on your own, there are important things you can do to make it easier for you and your bookkeeper. Here, we will outline three leading practices for bookkeeping we recommend to our clients.

Ben AsplundDecember 15, 2020Posted In: Business Tips

Differences between cash and accrual accounting

Learn the differences between the cash and accrual accounting methods and see how your online bookkeeper can help you keep up on all your online accounting demands.

Ben AsplundDecember 8, 2020Posted In: Accounting Resources

The true cost of doing your own bookkeeping

The appeal of doing your own bookkeeping is perhaps obvious: not having to pay someone else to do it for you. But the important thing to consider when you are thinking about doing your own bookkeeping or outsourcing it is what you are losing from taking that time from your business.

Ben AsplundNovember 3, 2020Posted In: Business Tips

Reaching the growing millennial workforce

Stay on top of what you should know about attracting and retaining a millennial workforce, and KPMG Spark, a small business CPA firm, will help you stay on top of your online accounting and bookkeeping. This blog's author is a millennial and the content therein represents the views of the author.

Ben AsplundOctober 27, 2020Posted In: Business Tips

4 Tips on how to keep your business afloat in a challenging economy

In any kind of economic downturn, small businesses are often hit the hardest. It’s now more important than ever to be creative and find ways to make your customers happy.

Ben AsplundOctober 13, 2020Posted In: Business Tips

The 4 Stages of Startups

As an online bookkeeping company, KPMG Spark has experience to help you understand your position in the business lifecycle of a startup that just might help you stay a bit ahead of the game.

Ben AsplundOctober 6, 2020Posted In: Business Tips

How to manage your payroll

Use these tips to help manage your small business payroll and remember, KPMG Spark facilitates payroll and and offers invoicing services in addition to online accounting services.

Eric BeardenSeptember 29, 2020Posted In: Accounting Resources

Subscribe

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.