Know you’re set up right with help from a QuickBooks expert who can help you connect your banks and credit cards, and learn best practices to use QuickBooks with confidence. Industry newcomers tend to use the terms “bookkeeper” and “accountant” interchangeably, but there are a few important distinctions between the two. Some of the links on our site are from our partners who compensate us. Kelly is an SMB Editor specializing in starting and marketing new ventures.

Knowing the differences between the two can help people find their niche in the industry and can give guidance to companies on who to hire for their needs. Bookkeeping focuses on the proper recording of financial transactions for your business. Usually, your bookkeeper would use double-entry accounting to record all your financial transactions. Double-entry accounting means that for every debit entry you make, a corresponding credit entry must be made. More detailed definitions can be found in accounting textbooks or from an accounting professional.

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Accounting software eliminates a good deal of manual data entry, making it entirely possible to do your own bookkeeping. However, it can be difficult to catch up if you fall behind on reconciling transactions or tracking unpaid invoices. Regardless of your small business’s complexity, bookkeeping will still take time out of your week, so be sure you have the resources before committing to handling it yourself. Some accounting software products automate bookkeeping tasks, like transaction categorization, but it’s still important to understand what’s happening behind the scenes.

When making this decision, there are two things you should keep in mind. In these documents, transactions are recorded as a single entry what is the difference between bookkeeping and accounting rather than two separate entries. If your sights are set on taking your company public, an accountant’s expertise becomes indispensable.

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These include investors, creditors, management, revenue services and regulators. Some bookkeepers focus solely on “write up” work, which basically consists of compiling the books quickly, usually for tax preparation purposes. Other bookkeepers provide “full-charge” services and can even serve as a financial controller for your company.

• Deferred tax assets indicate that you’ve accumulated future deductions—in other words, a positive cash flow—while deferred tax liabilities indicate a future tax liability.
• Accounting is more subjective, providing business owners with financial insights based on information gleaned from their bookkeeping data.
• These occur when your business has a net loss but isn’t able to deduct all of the loss in the current year.
• In 2017, Congress passed the Tax Cuts and Jobs Act which reduced the corporate tax rate from 35% to a maximum of 21%.

An enrolled agent (EA) is a tax professional authorized by the United States government. Their job is to advocate and assist taxpayers when they have issues with the Internal Revenue Service. To become one, you have to either have worked at the IRS or pass an EA examination.