Knowing the difference between an accountant and bookkeeper will help you determine which would be more suitable for the demands and goals of your business. Even though there are similarities, there are some differences, which you may want to familiarize yourself with before selecting one over the other.
Bookkeeper
Bookkeepers handle all the daily financial transactions of the company and organize and enter them in a bookkeeping system, such as QuickBooks®. Examples of these transactions include entering payroll, posting invoices and depositing funds. It also includes entering and paying bills from vendors and providing financial statements, such as the Balance Sheet and Profit and Loss, to the customers. They mainly work in small to medium size companies. It is not required for a bookkeeper to have an Accounting degree, but a solid understanding of basic accounting would be beneficial.
Given the automation of many bookkeeping systems, some bookkeepers lose the knowledge of how the entries impact a company’s financial makeup. A successful bookkeeper will be able to understand what the financial transactions represent and should be able to interpret the data for their clients.
The cost for a bookkeeper is typically less expensive than for an accountant or CPA. From my research, when comparing the two, often it is mentioned that the bookkeeper is less analytical than an accountant, to some degree this maybe correct, but a bookkeeper still needs to be analytical and demonstrate problem-solving skills especially when accounts don’t reconcile or assets don’t equal liabilities and equities, etc. A bookkeeper that has a strong understanding of GAAP (Generally Accepted Accounting Principles) will truly provide great and affordable value for your business.
Accountant
While bookkeepers handle the preparation and organization of financial data, accountants are typically responsible for the interpretation of data, making certain adjustments and running financial reports for management.
There are different levels of accountants. Some accountants can certainly act more like a bookkeeper where others might work at a higher level, analyzing, reviewing and dissecting the data created by the bookkeepers or accounting clerks. Some accountants may advise upper management on the efficiency of certain processes based on financial reporting or communicate potential profit availability. Accountants can prepare tax returns and typically have an Accounting or Business degree or a CPA.
They often work for bigger companies where the financial transactions are a bit more complex than for a small to medium size company.
Outlook for Bookkeeping and Accounting services
The Bureau of Labor Statistics projects an increase by 11% by 2022, which is an average increase. The increase is mainly due to the IRS and SEC putting pressure on companies to disclose certain financial data from business activity and strengthening financial regulations. Now more than ever is the time to hire the appropriate accounting or bookkeeping person for your business!
By: Andrea Tupper
