What is the difference between accounting and bookkeeping software?
Surprisingly, the question “what is the difference between accounting and bookkeeping software?” comes up quite often. As an accountant I was initially confused each time I heard this one. Bookkeepers and accountants do pretty much the same work – just at a different level or over a varying range of services – but their software is usually the same.
A bookkeeper is someone who spends most of their time doing the manual data entry that is the trench work necessary to keep a set of books. An independent bookkeeper is often working for 5 to 20 different companies a few hours or a few days a week in order to service their needs. Some more experienced or skilled bookkeepers add tax-preparation and other services to what they offer their clients.
On the other hand an accountant typically offers all those services plus audit, write-up (financial statement preparation), business consulting and other services. Oh – almost forgot payroll and sales taxes! – which are additional services that are very important and both bookkeepers and accountants assist with.
Since these two closely related professionals offer overlapping services, there’s little difference between accounting and bookkeeping software. A bookkeeper will traditionally work with software that is designed for small businesses and keeps a set of books. Often included in these pieces of software are features that offer a general ledger, Accounts Payable, and Accounts Receivable in a software package that keeps a complete set of books for company. They may also have tax-preparation software. One difference you’ll often see is that the bookkeeper will probably use the accounting product of their client whereas they will probably choose and purchase their own tax software (if they offer this service).
On the other hand, accountants will need more software to provide the broader array of services that they usually offer. They will almost always have tax-preparation software. They may have their own payroll software. They will also have software for preparing audits, and may also have write up, client project management, and other specialized software that allows them to provide the services that they do. Like the bookkeeper, they will often use their client’s software for the day-to-day general ledger, but will use their own software for the higher end functions or other services that they provide.
For example: a bookkeeper more often than not will work by visiting their client offices, log into the computer that they are authorized to use there, and work directly in the software that the client has purchased. Yet this isn’t the only way; they may also keep a set of books for their clients using software that they own while working out of a home or small office somewhere using the original source materials from the client. In both cases the software is likely to be the same or very similar.
When a bookkeeper or an accountant offers additional services they will probably have contracted with a company like CCH, Thomson Reuters, or Intuit for products to serve their clients needs. This could include tax-preparation software which each of these companies creates, or other specialized software for providing the services that they’ve been engaged to offer.
So what is the difference between bookkeeping and accounting software? There really isn’t any. The only big difference is between the software used to keep a set of books for a company (often called accounting or bookkeeping software) and the other software products that an accountant or a bookkeeper may use to provide additional services to their clients.