What’s the difference between a Bookkeeper vs an Accountant? Bookkeeping and accounting both contribute to the growth of virtually any business. However, it’s a common misconception that the work bookkeepers do and the work accountants do is essentially the same. This isn’t the case.
Although both play significant roles in an organization, they are different in many ways. This article will highlight some of the differences and similarities between a bookkeeper and an accountant.
Bookkeeper: Role and Responsibilities
A bookkeeper is essentially someone who records a business’s various transactions. Common on-the-job responsibilities of a bookkeeper include:
- Documenting transactions that involve money leaving a company or coming into the company. For instance, along with tracking purchases, a bookkeeper would also track a business’s sales.
- Confirming that the information in a business’s internal financial records accurately corresponds with the information reflected in bank statements.
- Keeping track of money a company may owe to creditors and other such parties, as well as tracking how much money others may owe the business.
A bookkeeper’s job might also involve generating and presenting various types of essential financial reports. Bookkeeping is very much like balancing a personal checkbook, only on a larger scale. Therefore, a bookkeeper might need to occasionally provide their employer with information about the business’s financial status.
Accountant: Role and Responsibilities
In terms of roles for bookkeeper vs accountant: a bookkeeper’s duties involve tracking the day-to-day finances of an organization, while an accountant often involves using the data a bookkeeper tracks or provides in order to fuel business development. Specific duties of a business’s accountant include:
- Reviewing and analyzing financial reports (which, again, a bookkeeper might generate) to draw conclusions about a company’s financial position. This analysis might also help them identify trends that could be leveraged to pave the way for growth.
- Researching new tax law developments and generally confirming that a business is complying with all relevant financial statutes and regulations
- Finding ways to minimize an organization’s tax burden.
- Preparing and filing business tax returns.
An accountant might also sometimes be tasked with generating financial reports. However, the nature of these reports might be more complex than those a bookkeeper would create.
Key Differences Between Bookkeepers vs Accountants
The responsibilities of bookkeepers and accountants can be similar in some ways. Their duties might also overlap from time to time.
Still, there are key differences that ensure the role of a bookkeeper could never be classified as being essentially the same as that of an accountant. These differences are illustrated through such factors as:
Someone handling the accounting function of a business should have a college degree in accounting or a similar subject. This requirement typically doesn’t apply to a bookkeeper. Although individual business owners might decide they prefer to hire bookkeepers with a college education, it’s not uncommon for bookkeepers to only be high school graduates.
- Daily tasks
The workday of a bookkeeper typically doesn’t resemble that of an accountant. The contrasting nature of their roles is responsible for this difference. While a bookkeeper might spend most or all of their day focusing on small details relating to a business’s daily finances, an accountant would devote their time to tasks that involve high-level analysis and overall financial strategizing.
A good way to think of the difference between a bookkeeper and an accountant is to consider the difference between someone who collects data about a sports team’s performance and the coach who uses that data. One role involves gathering important information, the other involves leveraging that information to develop long-term strategies.
A bookkeeper doesn’t necessarily need to earn a professional certification to do their job. Someone might decide to obtain a bookkeeping certification if they believe doing so will help them stand out to potential employers. Generally, though, there are no certification requirements for bookkeepers.
An accountant needs to complete an official exam to become a Certified Public Accountant (CPA). Although someone who has studied accounting in college but hasn’t yet completed the CPA exam might nevertheless be eligible for a role in a business’s accounting department, they may need to earn an official certification eventually if they wish to take on more responsibilities in the future.
When to Hire a Bookkeeper vs. an Accountant
If you run a business, a time may come when you need to make a decision regarding whether to hire an accountant or bookkeeper. Or perhaps you may need both of them in the business but you are unsure who to hire first. Making this decision is easier when you evaluate these factors:
- The size and complexity of your business
Is your business fairly small in terms of the size and volume of financial transactions? If so, hiring a bookkeeper rather than an accountant may be sufficient to fulfill your current needs. Be aware that you can always hire an accountant later on as your business grows.
- Specific goals
It’s critical to remember that accountants and bookkeepers fill different roles when deciding which to hire. You’ll be more likely to make the right choice for your business if you consider the different goals each type of professional can help you achieve.
For example, perhaps your goal is simply to monitor your day-to-day finances. You don’t need to hire an accountant to achieve this goal. A bookkeeper can provide all the assistance you need in these circumstances.
On the other hand, maybe you’re an ambitious business owner who hopes to develop effective strategies to propel your future growth. A bookkeeper could help you gather the basic data needed to make strategic decisions. However, an accountant can analyze this data, providing insights that a bookkeeper might be unable to offer.
- Your budget
Hiring a bookkeeper generally costs less than hiring an accountant. This is because bookkeeping is less specialized than accounting. As such, if your budget is currently tight, you may decide to only hire a bookkeeper until you can justify the cost of hiring an accountant.
Keep in mind that hiring a bookkeeper can also help you strengthen your budget. A bookkeeper could identify patterns or errors that might be causing your business to lose more money than it should be losing. By addressing these issues, you could make room in your budget for hiring an accountant.
Working Together: The Synergy of Bookkeepers and Accountants
Having both a bookkeeper and an accountant can often be ideal if your business can afford to have both. This is because, when both work together, a business enjoys a range of potential advantages that would otherwise not be available to it.
A bookkeeper can focus on tracking financial information and recording transactions. This allows an accountant to focus on using the data a bookkeeper compiles to develop strategies. A business owner could make more informed decisions as a result of this synergy.
This highlights an important point: You should aspire to eventually recruit both a bookkeeper and an accountant once your business reaches the stage when doing so is necessary and practical. You may hire a bookkeeper first, as their services are more affordable and more necessary in the short run. Later, you could engage the services of an accountant who would help you build upon the work your bookkeeper has done to chart new paths for your company.
Bookkeeper vs Accountant: Two Vital Roles
The main point to take away from this overview is that both bookkeepers and accountants can play major roles in the growth of a business. However, the specific nature of their roles is different. Understanding their differences can help you more successfully leverage each.