What’s the Difference Between Bookkeeping and Accounting?

For people who aren’t in the Bookkeeping and Accounting field, defining these two terms can be quite a challenge. While these are functions that are considered vital to every business organization, there’s a misconception that these two are one profession. Here we give you the notable differences between Bookkeeping and Accounting. Before anything else, let us first define these two terms.


, What’s the Difference Between Bookkeeping and Accounting?

What is Bookkeeping?

Bookkeeping is a crucial step in the accounting process. It’s more about identifying, measuring, and recording financial transactions. People who do the work in this process are called Bookkeepers. 


They primarily lay the foundation for accounting by recording financial transactions in ledgers or journals. Once these are done, they get passed on to accountants for interpretation. Bookkeepers keep track of all the money that goes in and out of your business.


, What’s the Difference Between Bookkeeping and Accounting?

What is Accounting?

Accounting, on the other hand, is the process in which accountants interpret and analyze data given by the bookkeepers for the primary reason of reporting the financial health of a business. This then becomes an integral part of an organization which would help and guide business owners in decision making when it comes to spending, saving, or investing. 

Bookkeeping vs. Accounting

Now let’s get to know more about their differences in terms of objective, skills required, types, and just how much these two processes affect a business’s decision-making.


But before that, it would be good for you to know that in recent times, the line between bookkeeping and accounting is slowly diminishing. With technology readily available, some accounting features are now being introduced to bookkeeping software. 


While it is true that businesses will need bookkeepers, their task would touch more on data entry, reconciling bank statements, and balancing bank ledgers. Some even say it might become obsolete in the coming years, with it included in some bookkeeping software—allowing for easy automation. With that, here are the differences between Bookkeeping and Accounting.

, What’s the Difference Between Bookkeeping and Accounting?

Bookkeeping vs. Accounting: Objective

The objective of Bookkeeping is to mainly keep all financial transactions and make sure that these are done correctly and systematically. Accounting’s objective is to gauge the financial situation and communicate it with management or concerned authorities.

Bookkeeping vs. Accounting: Skills Required

Unlike Accountants, bookkeepers do not really need any particular skill aside, of course, from the usual—good organization skills and attention to detail. They need to be accurate and knowledgeable in financial topics. 


Accountants, on the other hand, require a unique skill set that allows them to interpret data. They must have sufficient experience and education and can even get the title of Certified Public Accountant (CPA). They also need in-depth knowledge on tax planning regarding current legislation, financial forecasting, and risk analysis, dealing with insolvency cases, and negotiating the terms of business deals and moves with clients and associated organizations. 

Bookkeeping vs. Accounting: Types

In Bookkeeping, there are two types – single entry and double entry. In single-entry bookkeeping, a financial transaction only needs to be recorded against one category namely income or expense. In double-entry bookkeeping, every entry has two equal and corresponding sides. These are known as debit and credit. 


In Accounting, a company, business, or organization would let the accounting department prepare company budgets or plan loan proposals.

Bookkeeping vs. Accounting: Decision Making

When it comes to how these two processes affect decision-making in a company, business, or organization, management can make critical business decisions based on the accountant’s interpretation of the data given by bookkeepers. They cannot, however, make a decision just based on a bookkeepers’ data. 

Bookkeeping and Accounting similarities

With the differences laid out, there are some similarities between the two, namely:

  • Bookkeepers and accountants both work with financial data.
  • They have a common goal of improving the financial health of a business/organization.
  • Both require a basic knowledge of accounting.
  • Their roles can overlap when in small businesses.
  • Both are tax compliant.