Accounting and Bookkeping
| Category | Accounting | Bookkeeping |
|---|---|---|
| What is it? | The process of recording, summarizing, analyzing, and reporting financial transactions. | The daily recording of all financial transactions (like invoices, expenses, bank entries). |
| Purpose | To create accurate financial reports, manage tax, guide decision-making. | To ensure financial records are complete, organized, and up-to-date. |
| Who does it? | Accountants or accounting firms. | Bookkeepers (or accountants if needed). |
| Main Outputs | Financial Statements (Profit & Loss, Balance Sheet, Cash Flow) | Organized transaction records (sales, purchases, receipts, payments). |
| Tools Used | Accounting software (like QuickBooks, Xero, Zoho Books) | Spreadsheets, accounting software. |
In simple terms
Bookkeeping is about collecting and recording the raw financial data.
Accounting is about organizing, analyzing, and using that data to understand your business.
In the UAE (and most places now)
- Proper bookkeeping is mandatory by law (especially after VAT and Corporate Tax started).
- Companies must keep accounting records for at least 5 years.
- Audited financials are required for some free zones (like DMCC, DIFC, etc.) and for companies with turnover above certain limits.