Although accounting and bookkeeping services for wellness professionals go hand in hand, some key differences exist between the two services. Distinguishing the differences can be helpful if you are trying to improve on one field for the benefit of your business.
Usually, an accounting professional in Canada is also likely to be familiar with bookkeeping services based on similar roles. For example, a finance expert like Saijal Patel of Saij Elle, is completely different from both, in the sense that she provides guidance and advice on managing individual finances, whereas a bookkeeper maintains financial records and transactions, while an accountant specializes in financial analysis, reporting, and tax preparation for individuals and businesses.. Thus, understanding the differences in the functions is beneficial for you as a business owner.
You can also benefit from learning the differences in the two offices as a personal account holder. This is because you may only need one service at a time. Therefore, you will be better positioned to save funds and contract a professional accounting and bookkeeping firm for only the necessary services.
Despite this, each of services still go hand in hand. A successful business with continuous transactions will benefit from having both in operation. Hence, distinguishing the two services is primarily essential to help you hold different groups responsible and accountable for their roles during progress reviews or in case of an emerging problem. The following are seven key differences between accounting and bookkeeping:
Definition of Both Roles
The first difference entails the different definitions available for accounting and bookkeeping services for wellness professionals. On the one hand, a bookkeeping service involves procedures to obtain, accumulate, store and organize any financial transactions in your business or personal account.
Additionally, a bookkeeper will need to access your information database, which can exist in various formats. For example, if you have a spreadsheet where all financial transactions should be recorded, the professional will need them to complete their roles.
On the other hand, accounting is any procedure involving synthesizing data obtained by the bookkeeper. An accountant, therefore, consists in identifying the transaction data, putting it into different classifications, and verifying or measuring it to create a credible conclusion.
Moreover, accounting is also defined as creating a summary of financial transactions for interpretation and communication with the concerned stakeholders. In this case, you, as a business owner, would be a stakeholder needing the information to make an informed business decision.
The Variations of Work
Moreover, accounting and bookkeeping can differ in the different forms of work available. This touches on how each professional fulfills their role, depending on the demands they needs to meet.
Since a bookkeeper’s primary role is to accumulate and record financial transactions, their work can take on two primary forms; single or double data entry. If the service provider goes for a single entry, they will make a single record for every financial transaction. This is an acceptable format because it captures the necessary financial documents.
Further, the bookkeeper can make double entries for each financial transaction. The option is more advisable because it requires entries on both the credit and debit columns of the records. It is easier to track and balance all transactions to ensure accountability throughout.
For accounting, the forms of work also take on two main variations. Firstly, a professional can undertake day-to-day accounting and bookkeeping services for wellness professionals under the CPA mandate. These include synthesizing the financial transaction data as obtained from the bookkeeping team.
However, the accountant may also dive into forensic accounting, which involves a more in-depth analysis of transactions. Forensic accountants often step into their roles when an emerging issue is noted, especially with inconsistent marketing.
Thus, their role is to find any errors in transaction records, deliberate or accidental omissions in entering information, or fraud attempts to obtain funds illegally. An accountant can therefore provide investigative services when necessary.
The Required Skill Set
Further, a significant difference exists in the skill sets required between a bookkeeping service provider and an accounting professional. Usually, one can become a bookkeeper without standard qualifications, provided they understand the scope of work they are about to undertake.
Despite this, obtaining a bookkeeping certification is advisable, especially when looking for a distinguishing factor from other bookkeepers. Nevertheless, the certificate is not critical to whether one secures the role.
Conversely, an accounting professional must complete a degree education in accounting or a similar but relevant degree. The requirement is to ensure they have the necessary skills to handle arithmetic, logic, and organizational prerequisites to complete accounting demands. Moreover, some hiring firms may even require an accountant to have a master’s degree based on the work intensity.
It is also advisable for an accountant to complete their Certified Public Accountant(CPA) studies and receive certification, along with work experience. Based on these strict requirements for accounting, a clear distinction exists between the two roles.
The Scope of Work Varies
Additionally, the scope of work for bookkeeping services for wellness professionals is specific to ensure proper record-keeping. Therefore, a bookkeeper is tasked with providing invoices to parties that need to pay the business, ensuring that all transactions are within budget, keeping records of cash receipts, and settling outstanding debts.
On the other hand, an accountant’s scope of work entails the following:
- Ensuring bookkeeping service providers satisfy their roles
- Interpret records provided by the bookkeeping team
- Provide professional ideas to you regarding proper financial management
- Reducing the chances of fraud or embezzlement
Influence of Decision Making
A bookkeeping service is essential in obtaining and maintaining financial records for your business or personal account. However, since the data still needs to be processed, it cannot inform major decisions regarding future transactions. Conversely, accounting details are critical for advising the required stakeholders, specifically on transactional issues, because the data is already analyzed.
Determining a Company’s Financial Position
Since accounting services cannot influence financial decision-making without analysis and synthesis of the data, they also cannot correctly show a company’s financial position. Accounting professionals must process the information and prepare reports to demonstrate the situation.
The Work Objectives
The basic work objectives in bookkeeping services for wellness professionals are ensuring the client understands their financial situation and whether your business is experiencing steady economic growth. On the other hand, bookkeeping objectives are to systematically record and maintain transaction information for future reference. Though different, the work objectives both work to meet your business goals.
Whether you are an individual account holder or a business owner in Canada, you require accounting and bookkeeping services for wellness professionals to help manage your finances. A professional accountant or bookkeeper will understand the different demands to meet, and ensure the balance of your transaction. Additionally, working with a skilled team saves you time, money, and effort that you would have otherwise used yourself to maintain your finances. Therefore, working with a trusted team is highly beneficial.