Many people would wonder if there is a difference between accounting and bookkeeping. Both include the financial management of a business, and both are essential for a hassle-free taxation. However, past their similarities, they have some significant differences. It is important for business owners to know and understand why going for accounting firms in Dubai might not be enough. A professional accountant and an experienced bookkeeper could help you increase revenue by up to 16 %. Moreover, they could assist optimize business performance.
Briefly, Accounting Vs. Bookkeeping
Bookkeeping is transactional, dealing with the everyday monetary transactions and administration of a business. Accounting involves taking the information produced by bookkeeping and producing insights and forecasts.
Bookkeeping in Simple words
Bookkeeping associates with daily recording of financial transactions, including:
- Invoicing, accounts receivables and payables
- Bank reconciliations
- Expenses and petty cash
- Financial statements production including cash flow, income statement, and balance sheet
- Payroll transactions
Quality bookkeeping relies on accuracy hence bookkeepers often use a software to manage and track transactions, which decreases human error and speeds up the process.
Accounting in Simple words
Accounting is a broader term than bookkeeping. In its loosest application, accounting can refer to both the recording of financial information (like bookkeeping) and the synthesis of that information into useful reports for both business people and tax agencies.
When comparing accounting refers to tasks such as:
- Financial forecasting
- Financial audits
- Strategic planning
- Tax returns
- Performance optimization
It is accurate to think about both bookkeeping and accounting being part of the same accounting process. The financial data recording (bookkeeping) is the first phase while the data interpretation (accounting) is the second.
What are the qualifications? Do they differ?
The most obvious difference is bookkeeping has no standardized, obligatory qualification for practicing bookkeepers but they absolutely must have at least 2:4 years’ experience. Therefore, a bookkeeper’s strength comes from previous experience and training.
Accountants need to get at least an undergrad degree in accounting or, in some circumstances, finance. Yet, to practice in larger companies, they have to qualify as a CPA, a Certified Public Accountant. CPAs can stand in an audit, work in a public company, and bring an extra level of expertise to financial management.
What are the Skills needed for each?
The best bookkeepers, in UAE or elsewhere in the world, must be extremely accurate, detail-oriented, and organized to avoid misplacing vital information.
Accountants too need to be accurate moreover have a sharp eye for details. However, they must also conglomerate this trait with business acumen and strategic vision. It is favorable for them to have managerial skills to lead financial departments or teams when needed.
In addition to having integrity for both of them for the great responsibility bestowed on them on daily bases.
Does the cost go higher with Accounting?
Generally, bookkeepers are cheaper to hire than accountants are. That is because accountants can handle more functions and have more certifications that are official.
How much you eventually end up paying a bookkeeper depends on how much you need them to do, and whether you hire someone in-house.
Outsourced bookkeeping services can be a significantly cheaper option. When it comes to accountants, costs are higher and with CPA-qualified professionals earning the most.
Do You Need one of the Accounting Firms in Dubai? Or a Bookkeeper is enough?
Early-stage startups and SMEs can often get away with doing their own bookkeeping and accounting. Nonetheless, as businesses grow, the need to have a professional to handle them emerges.
Signs your business needs a professional help in financial management:
- Not performing bank reconciliations at the end of the month
- Not keeping sufficient financial records
- Consistent cash flow problems
- Not using the Chart of Accounts correctly
These issues can be rectified by getting a bookkeeper. Even in small businesses or startups, using a reliable bookkeeper is vital. Accurate data is essential as you make strategic decisions. With accurate data, you can speak to due diligence queries, back up growth projections with a clear understanding of your current finances. Combining a professional bookkeeping service with an accountant guarantees 360-degree advice and management of your business.
Hiring the Best Accounting & Bookkeeping Service in Dubai UAE for your company is the first step in setting yourself up for success. At IBG, we strive to add value to clients saving you time and securing your business through giving you a solid ground to stand be keeping an eagle eye on your finances. We have assisted hundreds of companies whether SMEs or startups and are familiar with the legal structures and processes in place, and we have developed a suite of tools that makes it accurate, error free and more efficient. This means less hassle for you and guaranteed success.