Accounting vs bookkeeping: What's the difference?

There’s a common question in business: accounting vs bookkeeping…what’s the difference?

Hush now, business owners. Don’t let this query keep you up at night. We’re here to answer this age-old question so you can rest easy.

And, you know, learn the difference.

What's the difference between accounting and bookkeeping? 

The difference between accounting vs bookkeeping can be summarized like this: accounting is analysis-focused, and bookkeeping is transactional.

We know, we know—you’re here for more than a one-sentence summary. So, let’s dig in with a few more facts.

Bookkeeping is a way to record and organize the financial moves of your business: who’s getting paid, who’s paying you, receipts, bills, and more. Or, in general, what’s coming in and out of your business.

Accounting, though, well…that’s a bit more deep. Literally.

Accounting is like the doctor you’ve been searching for—the one who listens and asks questions. Then more questions. Once it has what it needs, accounting assesses your financial health and gives you insights based on the data it’s seeing.

And in the case of your business, that data is the numbers from your bookkeeping. Did you just have that “aha” moment? We thought you might.

What is accounting?

Let’s jump back to that moment of bliss when the pieces started to come together. ✨
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Accounting tracks, interprets, and analyzes financial data to provide insights on the financial health of your business. This includes analyzing documents like financial statements, budgets, tax returns, and more. 

It gives you a better overview of how your business is doing, where it needs support, and where it can grow. But before it does that, accounting’s gotta start somewhere.

Enter the world of bookkeeping. 

What is bookkeeping?

Bookkeeping organizes and documents the financial moves of your business: tracking receipts and bills, recording business transactions, managing invoices and payroll, and more. Sometimes—particularly in small businesses—there can be an overlap between accounting and bookkeeping. In business, you’ve gotta do what you gotta do. And sometimes, that’s more than one job. 💪

Accounting and bookkeeping help in one place

So, now you know the difference between bookkeeping and accounting. 🎉

And no, we don’t mind if you bring it up at your next dinner party. In fact, we’ll even help you out a bit:

“Hey, how’s it going? You know, I finally found the answer to what’s been keeping me up at night. No, no…not climate change or how to get Taylor Swift tickets. (But those, too.) I found out the difference between accounting and bookkeeping! Bookkeeping is transactional and accounting is analysis-focused, but both are needed in order for your business to run smoothly. Speaking of smoothly, how’s that red wine goin’ down?”

End scene—but not the end of our support. In addition to conversation starters, Wave can help with all your bookkeeping and accounting needs. Plus, we’ve got in-house experts who can give you the VIP (Very Important Professional) treatment so you can make smart, data-driven business decisions. Then get back to your dinner party, solving climate change, or the ticket queue.