What is Bookkeeping – It's the same as Accounting Right?


What Is Bookkeeping?

One of the biggest questions I get is, can you do my tax return? People plod along or steam along depending on the year they and their business have had, get to the end of the year and THEN think oh dear what do I do with this draw or garbage bag full of receipts its ok I will take it to my accountant. Well actually, there is a difference between bookkeeping and accounting. The simplest way to break it up is this: Bookkeeping is the sorting of the little transactions that happen through the year, the accounting is the working out what these totals mean.

Let’s give you an example, Jo has a retail store, she has been working for herself for seven months she has her bank account set up, she has money coming in and out, sales coming in and she is paying bills. She decides it’s time to go and visit her accountant just to check what she is doing is right, she has been concerned from day one that she might have to do this thing called BAS. Very proud that she has her business bank account set up she heads off with copies of her bank statements to her accountant. Great says her accountant you look like you’re doing lots of sales, can you tell me the total? Um nope says Jo, ok says the accountant, we can work all of this out for you but really you should hire a bookkeeper. A bookkeeper will help you sort all your receipts, sales and bill payments into sections so we can look at the specific totals and see if you need to register for BAS or even more fun if you’re making a profit?

So bookkeeping is a very special section of your business, it’s a piece of the puzzle its own. There are many pieces of a business puzzle of which we will cover another time but for now does that make bookkeeping seem simpler? Let’s do a list:

  • Bookkeeping is something you ideally do monthly, it can be done at any time but monthly is recommended for a small business at a minimum. We will talk about weekly at another time.
  • Bookkeeping is a way of sorting all your expenses and sales so you know the totals of each month for each thing.
  • You can run a business without bookkeeping but it’s a bit like driving without the headlights on.
  • Bookkeeping helps you manage your bills so you know what’s due when and what you owe people.
  • Bookkeeping includes your invoicing.
  • Bookkeeping is something we add to your Accountant services so your Accountant knows all the information they need to do the best for you.
  • Bookkeeping can we done in a paper book (the old skool way and option), can be done using spreadsheets or my preference accounting packages and there are many.
  • You can do your own bookkeeping OR someone can do it for you, let’s face it your AMAZING at what you do, do you really want to be matching receipts up to transactions in your bank account and making sure it all balances, my guess is HELL NO!

As you can see bookkeeping really can be the heartbeat of your business and getting a little help can take so much pressure off so you can focus on the fun stuff, the growing the business, your customers; the people you love to help and also how you’re going to spend your pretty pretty profit.

Sign up to receive all the latest news and updates from Accounting Angels.