You have just started your business and you already have your entire schedule packed with to-do lists covering meetings, client calls, vendor setup, and what not? The last thing you wish to do is handle admin-related redundant tasks that can be easily automated on your own. That’s where good automated software can save you. People often confuse bookkeeping software with accounting software because they do have a lot in common. They both help you keep track of your financial information, for example. But accounting software is a lot more complicated than bookkeeping software. Simply put, bookkeeping is a part of the whole enterprise accounting system. In this article, we’ll have a look at the basic features that differentiate bookkeeping software from accounting software in general.
Bookkeeping involves streamlining the documentation process of daily, monthly, quarterly, and yearly financial transactions in the books of the business. These transactions include tax payments, sales revenue, loan payments, interest, company payroll, and any other payment or receival of money from the company account. The only objective of efficient bookkeeping software is to maintain the utmost accuracy in maintaining these records in the system. With the help of bookkeeping software, this same process is automated that simplifies and speeds the daily tasks of your accounting executive. Having software eliminates the possibility of potential human errors in filing an invoice and can help fix irregularities before it’s too late.
An accounting software on the other hand is a computer program that assists bookkeeping professionals in recording these transactions. It involves interpreting, analyzing, summarising, and reporting the business transactions of a business. It summarises your financial transactions and generates reports reflecting the financial position, operations, and cash flows of a company. If not automated, manually entering these transactions or consolidating reports can be tiresome for business. For starters, these reports are never on the same platform. Every accountant has to juggle through different platforms to extract entry data and summarise cash flows that are now easily automated through accounting software.
Key differences between bookkeeping and accounting software
|Bookkeeping software||Accounting software|
|One segment of the whole accounting process||Uses data generated by bookkeeping software for further analysis|
|Ultimate objective of bookkeeping software is to record transactions with accuracy and provide input to accounting software||Ultimate objective of accounting software is preparing comprehensive financial statements to support informed decisions and judgments.|
|The person responsible for bookkeeping is called a bookkeeper.||The person responsible for accounting is called an accountant.|
|The number of accounting features available in bookkeeping software can be limited.||The number of accounting features available in accounting software can be boundless in nature.|
|Bookkeeping software does not allow a broad list of customizations.||Accounting software allows a range of customizations depending upon the size of the organization, features required, industry, business type, etc.|
|Bookkeeping software does not help strengthen the security of your system.||Accounting software helps make your financial transaction storage secure with data encryptions and limited access authorizations.|
To summarise, an accounting platform, in essence, integrates the objectives and functions of bookkeeping and accounting software, but that’s not all. Bookkeeping software can be constraining. They’re not particularly adaptable in terms of how people can work with their own needs. With accounting software, this isn’t the situation. Visit https://dext.com/uk for more information.
Accounting software provides a comprehensive set of financial tools, as well as the ability to customize functionality and place a greater emphasis on data security. In conclusion, the decision is straightforward. Companies no longer have to pick between bookkeeping and accounting since accounting software provides a comprehensive accounting solution that helps them by continuously adapting to their changing demands.