What is the difference between bookkeeping and accounting?

Bookkeeping is the recording half of the money work, and accounting is the reading half. The Bureau of Labor Statistics describes bookkeepers as workers who compute, classify, and record data to help organizations keep complete and accurate financial records, and accountants and auditors as workers who prepare and examine financial records.

Both jobs work from the same ledger, and what keeping books means is the first half of the story. The habits around it sit in the basics of keeping books.

What each job produces

A bookkeeper leaves behind a ledger: every sale, bill and payment sorted into the right account. The regular check on that ledger is matching bank feeds to the ledger. When there are several companies the ledger splits too, into separate ledgers for each business.

An accountant starts from the finished ledger and prepares and examines it. If the ledger is a mess, that hour goes to cleanup instead.

Where the two jobs differ

• Work. A bookkeeper records and classifies transactions. An accountant prepares and examines the finished records.
• Training. The usual entry-level education is some college, no degree for bookkeepers and a bachelor's degree for accountants and auditors.
• Pay. Median annual pay is $50,670 a year for bookkeepers and $83,680 a year for accountants and auditors. The hourly side is in typical bookkeeper pay.

Which one you need

If the books are behind, start with the recording. Cleaning up neglected books comes before any analysis. Handing the recording to a person is one route: paying a bookkeeper by the month is one way to set it up, and services that keep the books for you are another.

Services such as Pilot do the recording. Software covers part of it, and accounting tools worth a look and Xero are two places to start.