It’s not uncommon for small business owners in South Africa to think that bookkeeping services and accounting services are the same things. This is because most people can’t nail the difference between bookkeeping and accounting. However, there is a distinction between these two processes. Read on to find out how bookkeepers and accountants support your business at different stages of your financial cycles.

What is Bookkeeping for Small Businesses?

In simpler terms, bookkeeping is more of a transactional and administrative process. The bookkeeper is more concerned with recording financial transactions. These financial transactions can then be used to make more informed business decisions.

Bookkeeping involves:

  • Recording financial transactions
  • Invoice creation
  • Posting debits and credits
  • Prepare financial statements like balance sheets, cash flow, and income statements
  • Maintenance of historical accounts and general ledgers
  • Payroll preparation

The maintenance of a general ledger is one of the key components of bookkeeping. This is an essential business document that features amounts from sales and expense receipts. In bookkeeping terms, the process of recording these transactions is known as posting. So, the more sales your business makes, the more frequently a ledger is posted. Bookkeepers can create a ledger using software, computer spreadsheets, or manually on paper.

The complexity of your bookkeeping needs is dependent on how big your business is. If your business has grown and you complete a lot of transactions daily, you will probably need to outsource your bookkeeping services.

Accounting is more than just recording financial transactions. The processes involved in accounting services are more subjective. For instance, an accountant can give you insights into your small business’s financial health using the information obtained from a bookkeeper. 

Accounting involves:

  • Preparation of adjusting entries
  • Analyzing a business’s financial statements
  • Reviewing the cost of operations
  • Prepare SARS tax returns
  • Helping business owners understand the impact of financial decisions

One of the most significant parts of accounting is studying the information provided by bookkeepers to help you make more informed financial decisions. This is part of how you can better understand profitability and gain an awareness of cash flow in your business. If you want to gain more insights into your business and get a bigger picture of what’s happening, you need both bookkeeping and accounting services. An accountant like The Books Consulting can also help with services like strategic tax planning, analyzing your business’s financial position, forecasting, and SARS tax filing.

Ready to Take Your Business to the Next Level?

With your new understanding of the difference between bookkeeping and accounting services, you can start making better use of each to grow your business. The Books Consulting is a South African business that can provide you with a team of bookkeepers and accountants who will do your bookkeeping and accounting for you. Contact us today to set up an appointment and learn more about how our services can help your small business grow.

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