top of page
  • Admin

Bookkeeping VS Accounting

As a small business owner, you will need your financial data to be accurate and up-to-date, as this will help your business maintain a healthy cash flow. However, as the company continues to grow and expand, the act of financial management becomes more cumbersome because more cash is now coming into and out of business. At this point, you are going to dread handling the company’s finances on your own, because it becomes extremely time-consuming.

When your company’s transactions start to grow, you're going to need help! However, most business owners are confused about what type of help they can get. Should they hire a bookkeeper or an accountant? Sometimes both words are used interchangeably but are they really the same thing? The answer is, no.

How does a bookkeeper differ from an accountant?



Bookkeeping is the recording of financial transactions, and is part of the process of accounting in business. Transactions include purchases, sales, receipts and payments by an individual person or an organization/corporation.

Bookkeeping is made up of activities like:

  • Recording Financial transactions

  • Posting debits and credits

  • Producing invoices

  • Making sure that the subsidiaries, general ledgers and historical accounts are balanced

  • Managing payroll

Managing the general ledger is the key component in bookkeeping. The general ledger is the document a bookkeeper uses to record sales and expenses made by the Company. The process of doing this is called posting. A ledger is best created by using an accounting software (some businesses also resort to excel spreadsheets or the simple pen-and-paper technique, which is not advisable especially with a Sdn. Bhd. company which must be audited!)

These are the functions of the bookkeeper. The work gets more complex as the business increases in size. This is because all the transactions must be recorded and if the amount of sales and purchases keep increasing, so does the bookkeeper’s workload.


The accounting process is a high-level process that uses the details collected for general financial models by a bookkeeper or a business owner that will help the organization move forward.

Accounting consists of processes such as:

  • Recording expenses that have been made but not yet recorded in the bookkeeping process.

  • Preparing the financial statements of the business.

  • Running analysis of operation costs

  • Backing up your income tax claims and returns

  • Keeping the financials in order to ensure statutory compliance

  • Helping the business owner to understand the impact of his financial decisions.

The accounting process provides reports that merge the important financial indicators of a business. As a result, the owner of the company has a clear view of the state of his business and is aware of how profitable the business is.

The accounting process takes the information in the ledger and breaks it down in such a way that it reveals the bigger picture of the business. This helps the owner to plan and set down strategies for growth and business advancement.


We can’t stress enough the importance of timely and accurate bookkeeping and accounting, especially for business owners! When the time comes for the company’s accounts to be audited, properly managed financial records can save business owners time and money.

9 views0 comments


bottom of page