When most individuals consider the differences between AAT bookkeeping and accounting, they find it difficult to make a clear distinction. While bookkeepers and accountants have similar objectives, they assist your company at various points of the financial cycle.
Simply speaking, AAT bookkeeping is concerned with recording financial transactions and is more transactional and administrative. Accounting is more subjective, providing insights into your company's financial health based on accounting data.
Future Connect will go through the functional distinctions between accounting and AAT bookkeeping and the duties of bookkeepers and accountants.
An Overview of AAT Bookkeeping vs Accounting
When choosing a career in either sector, it's important to understand the differences between accounting and AAT bookkeeping. Bookkeepers maintain track of a company's day-to-day financial transactions. On the other hand, Accountants are more concerned with the larger picture.
Many intricacies are associated with bookkeepers, and meticulous attention to detail is essential. On the other hand, Accountants prefer to use the bookkeeper's inputs to prepare financial statements and regularly evaluate and analyse the financial data collected by bookkeepers. Audits are performed, and future company demands are forecasted.
The two professions are quite similar, and accountants and bookkeepers frequently work together. Many of the same talents and qualities are required in each domain. However, there are important variations, such as the labour done in each job and the skills needed to succeed. The following points compare the education requirements, skills necessary, typical beginning salary, and accounting and AAT bookkeeping employment prospects.
AAT Bookkeeping
The practice of managing and documenting all financial transactions in a business's original books of entry is known as AAT bookkeeping. The AAT bookkeeping process entails systematically summarising and organising all of the company's financial transactions in chronological order.
AAT Bookkeeping is concerned with a company's daily financial activities and transactions. All economic activities are documented in the original reports, including tax payments, sales revenue, loans, interest income, wages and other operating expenditures, investments, etc. The data of accounts are maintained and recorded by bookkeepers.
The books of account must be current since they serve as the foundation for an accounting qualification. The precision of its AAT bookkeeping determines the correctness of a business's accounting process.
What is the role of a bookkeeper?
In the classic sense, AAT bookkeeping has existed for as long as there has been business - around 2600 B.C. A bookkeeper must keep meticulous records of every money entering and exiting a company. Bookkeepers maintain track of everyday transactions in a regular, easy-to-understand manner, which helps accountants execute their duties.
Here are a few examples of typical AAT bookkeeping tasks:
- Keeping track of financial transactions
- Debits and credits are recorded.
- Invoice creation
- Payroll administration
- Keeping ledgers, accounts, and subsidiaries in order and balancing them
- Maintaining a general ledger, which is a document that records the amounts from sale and expense receipts, is one of a bookkeeper's key responsibilities.
What skills does a bookkeeper require?
Bookkeepers are not obliged to be certified to handle the books for their clients or employers; however, licensure is available. AAT Bookkeepers must have at least two employees who are eager to acquire new methods and approaches.
Accounting
Accounting is the process of interpreting, analysing, summarising, and reporting the financial transactions of a business. Accounting financial statements give an in-depth look at what happened in the economy during a certain accounting period. Accounting financial statements give an in-depth look at what happened in the economy during a certain accounting period. The financial status, activities, and cash flows of a corporation are summarised in these statements.
Accounting qualifications combine accountancy data to make it more intelligible and transparent to all parties involved. It aids firms in keeping the latest and most accurate accounting records.
Accounting is the process of interpreting, analysing, summarising, and reporting the financial transactions of a business. Accounting financial statements give an in-depth look at what happened in the economy during a certain accounting period. We evaluate a company's success.
What are the qualifications combined?
You may have to crunch numbers as an accountant, but it isn't the only talent you'll need. It's also necessary to have strong reasoning skills and solve big-picture problems. While bookkeepers ensure that the little pieces fit together correctly, accountants utilise those small bits to derive far more significant and wide-ranging conclusions.
Accountants can work for a corporation or for themselves, and they can operate in a variety of fields, including law, insurance and health, small business, and, of course, tax accounting organisations. After accounting training, accountants spend their days dealing with numbers and financial information. Those who dislike arithmetic, become easily confused while performing simple calculations, or are otherwise opposed to number crunching should not apply.
What skills does an accountant require?
Depending on their expertise, licences, and certifications, accountants have a variety of credentials. A bachelor's degree from an authorised institution or university is required to work as an accountant.
A CPA has satisfied the state's standards and passed the Uniform CPA test. They must also keep their certification by meeting continuing education criteria.
When interviewing for a CPA, seek someone knowledgeable about tax law, accounting software, and excellent communication skills. They should be familiar with your sector and small enterprises’ unique demands and expectations.
Salaries and Benefits for New Employees
Both vocations, particularly accounting, have a wide range of starting pay. The amount of money you make as a first-year accountant is mostly determined by the professional route you choose. While accounting may be a successful long-term job, unlike corporate attorneys or investment bankers, most accountants do not make a lot of money in their first few years.
In general, a candidate fresh out of school will be paid the highest in public accounting. Depending on the city, you may expect to make between $40,000 and $60,000 in your first year. The Big Four companies of Ernst & Young, Deloitte, KPMG, and Pricewaterhouse Coopers, in particular, spend far more than mid-size and small organisations organised Four accountants. Even though the firms do not reveal salaries on their websites, the advantages might be appealing. KPMG, for example, provides workers with up to 25 days of paid vacation time, as well as telecommuting options and a comprehensive health insurance package.
On average, mid-size and small public accounting companies pay around 10% less than the Big Four. The beginning wage range is fairly large if you work for a corporation internally rather than for a public accounting firm. Private firms do not pay more for young accountants with limited experience than the Big Four in most situations.
Rather than an annual salary, bookkeepers are frequently compensated on an hourly basis. The average hourly pay for someone new to the industry is $20.
Assuming a 40-hour weekday, this equates to about $40,000 per year. Hourly pay has the advantage of paying 1.5 times your typical wage for hours worked beyond 40 per week. Extra hours are common in bookkeeping during the hectic tax season, which runs from January to mid-April.
Particular Points to Consider
Accounting qualifications give far more upward mobility and earning possibilities as a long-term profession. The education necessary to succeed in the work is more extensive, but the payback may be substantial in the long run.
If you're interested in the accounting profession but aren't sure if you want to go all-in, AAT bookkeeping is a wonderful place to start. If you wish to work with a high income and adequate security but aren't searching for a long-term career, you could be a good fit for bookkeeping. The entry hurdles to AAT bookkeeping are substantially lower, and the rivalry for jobs is much less strong.
Conclusion:
The bookkeeper's well-organized financial records and properly balanced finances, as well as the accountant's sensible financial planning and accurate tax filing, all contribute to a company's long-term success.
Some entrepreneurs learn to manage their money on their own, while others hire a professional to help them focus on the areas of their business that they like the most. Regardless of which option you choose, investing time or money in your business financials can only help your company grow.
FAQs
Q.1. Is it difficult to learn bookkeeping?
It is not difficult to learn how to be a bookkeeper if you are adept and comfortable with mathematics and computing figures and are prompt, organised, and detail-oriented.
Q.2. What Accounting Positions Are in High Demand?
According to Northeastern University in Boston and the U.S. Department of Labour's Occupational Handbook, comptroller, accounting manager, senior tax accountant, and internal auditor are among the most in-demand accounting occupations.
Q.3. Is it possible for accountants to handle AAT bookkeeping?
They can do AAT bookkeeping tasks, but they rarely do so. Instead, they put together complete financial statements, check the records of public firms, and maybe write tax reports.