WHAT’S THE DIFFERENCE BETWEEN A PROFESSIONAL ACCOUNTANT AND A BOOKKEEPER?
Many business owners assume that bookkeeping and accounting are the same, but there are a few very important differences between the two occupations. Understanding the differences in how accountants and bookkeepers help support your organization’s financial goals is the key to investing your time — and money — wisely. Below, we’ll look at the different roles that bookkeepers and accountants play within your business.
Bookkeepers help keep businesses running efficiently by managing financial transactions, reconciling accounts, and performing other duties related to the ongoing maintenance of a company’s financial records. Generally, bookkeepers must have an associate degree or two to four years of bookkeeping experience. Their work is overseen by either an accountant or the small business owner whose financial records they are maintaining. While their duties may vary depending on the nature of the organization, some of the tasks that are usually performed by a bookkeeper are:
- Processing financial transactions and records, such as invoices, payments, and receipts
- Managing accounts payable and accounts receivable
- Preparing financial statements
- Managing payroll
- Preparing a business activity statement (BAS)
With the widespread use of specialized accounting software, there is a wide range of other tasks that can be performed by a bookkeeper. As more organizations have computerized their financial data, many bookkeepers are taking on additional tasks such as billing, monitoring overdue accounts and even making purchases.
As with bookkeepers, accountants assist businesses and organizations with the ongoing maintenance of their financial records. Unlike bookkeepers, Accountants are usually Certified Public Accountants (CPAs) or on a track to become certified and licensed. The difference between the two professionals is that while an accountant is qualified to perform many of the same duties as a bookkeeper, there are certain services he or she can provide that a bookkeeper cannot. These services include:
- Tax planning and advice
- Financial management advice
- Monitoring loans
- Corporate compliance reporting
An accountant’s role in an organization is more advisory than that of a bookkeeper. While a bookkeeper plays an integral role in organizing a company’s financial data, it is the accountant who analyzes that data and uses it to assist the business with tax filing, financial forecasting, and strategic tax planning. To qualify as an accountant, an individual will have attained either a bachelor’s degree in accounting or finance or a master’s degree.
FIND THE RIGHT FIT
Both bookkeepers and accountants play a valuable role in the financial success of any business. Understanding the differences between the two roles, and which tasks should be delegated to each, is the key to keeping your organization running smoothly. Many businesses outsource their bookkeeping and accounting functions to CPA firms rather than hiring full time in-house staff for these positions.