Accounting Vs. Bookkeeping and Tax Preparation – Three Different but Correlated Fields

What is the difference between accounting and bookkeeping?  Technically the answer lies what services the person is performing. If the person is just recording the basic financial transactions of the company then he is a bookkeeper.  If a person is responsible for all of the financial reporting or creating the methods of accounting use then he is an accountant.

Accounting is the big picture. It is the system establishes to keep a track of all of the financial data. It creates the basis of financial reports that shows how your company is doing. Accounting include every concept of finance of your company including things like account receivable, accounts payable  and payroll.  It also track and manages the information regards the TAX your company need to pay and receive. Bookkeeping is the daily grind.  It’s a systematic recording of dates, amounts and accounts affected by every financial transaction occur in company.   In larger companies this type of data management may be broken down into small departments with more accurate responsibilities to individuals.  There can be one person who is responsible of entering data of transactions effected by accounts payable and the other person is responsible to enter transactional data of accounts receivable. Depending upon how large the company is .there can be whole departments to handle these major aspects of bookkeeping.

In smaller companies the owner can be responsible for all the bookkeeping for the company. You are also heard about the professionals who prepare for tax.  These people may called as account persons. Technically they are not accounts. Initially accountants fill the forms of tax, this was their only duty. Later the tax preparation became increasing complicated and become a totally different field from accounting.  Tax preparation is totally different then accounting and bookkeeping now.  Most educated individuals know how to organize the tax data and entered in to the tax form are called tax preparer.  There are also those persons including some CPA’s Certified Public Accounts who can perform all free Tax calculations.