Although we sometimes tend to confuse, bookkeeping is not the same as accounting, but the keeping of books can be considered as a part of accounting.
Business bookkeeping is the understood as the process of keeping transactions in the books. What it really means is writing in a book all transactions related to business operations on a daily basis: how much cash we have, how much we spend, how much people owe us, how much I owe to my suppliers and to the government. Recording assets and liability is more a concern of accounting.
Accounting is broader and more complete than Business Bookkeeping in that it uses the information about all transactions to generate more detailed reports like balance sheets, income statements, etc.
With the creation of software for accounting, business bookkeeping has become obsolete, since the system is responsible for delivering complete information that is ready to be interpreted and analyzed.
Business Bookkeeping has been relegated in importance by senior executives or big companies because they rely more on Accounting to make their financial decisions. The recording of transactions in books is always important, but accounting makes it simpler for managers to make financially educated decisions.
Accounting allows companies to create elaborate analysis of transaction and identify negative patterns in their operations in order to strategically solve those issues.
You may ask yourself then, what is the purpose of business bookkeeping? First remember that bookkeeping is to record, develop, prepare, and organize all transactions made by a business in order for it to have them available when needed.
The objective of business bookkeeping is to achieve one of the principles of accounting which the chronological recording of economic events that happen in a business. Through business bookkeeping we manage to capture, lay out, and print to a physical book or magnetic media the economic events that happened in a given business. Business Bookkeeping allows us to achieve the classification, organization and registration of each operation a company makes.
There is a legal requirement to maintain your financial records, but most important of all, if you know how your business is doing, you can take informed strategic decisions on development.
At the end of the day, business owners should be focusing on generating income, so it worth building a team around you who can handle the bookkeeping, administration and sales handling around you by outsourcing or employing – outsourcing can be cheaper and has the added advantage of you can increase or decrease your level of usage depending on how busy you are!