This is one of the most common misunderstandings, especially among small business owners.
Let me explain it simply:
- Bookkeeping = recording what happened
- Accounting = understanding what it means
For example:
- Bookkeeping records your sales
- Accounting tells you if those sales are enough to sustain your business
As an accounting manager, I analyze and interpret data.
As a CPA, I use those records to:
- Prepare financial statements
- Compute taxes
- Advise clients
Think of it this way:
Bookkeeping is the foundation
Accounting is the decision-making tool
You need both.