Most people find it hard to differentiate between an accountant and a bookkeeper. Some people make the mistake of using these words interchangeably without knowing that they mean two different things. The distinct functions of these two people in charge of financial management are pretty straightforward, but there are times that both play the same role. In this post, we look at the differences between accountants and bookkeepers.
But before we even get to the differences between the two, let us first start by defining the two words:
This is a detailed recordkeeping system that organizes and summarizes financial transactions. Every transaction should be recorded and documented to provide relevant information to help with future business decisions. Accounting duties are usually done by a certified professional accountant (CPA).
This is the process of recording and summarizing an organization’s business transactions, usually done by hand, machine, or electronic means. It includes journalizing (recording in a journal), posting (transferring from journals to ledger accounts), and reporting. Unlike accountants, bookkeepers don’t necessarily have to be certified.
Bookkeeper Vs. Accountant
An accountant must have unique credentials to be called one. They must have a degree from a recognized university, such as a bachelor’s in commerce, science, or any other related field. They also must have completed relevant training programs and professional accreditations such as CPA, CIA, ACCA, etc., and be a member of professional accounting organizations.
A bookkeeper, on the other hand, doesn’t necessarily need credentials. A person hired to do bookkeeping work does not have to be a member of a professional organization.
Bookkeeper Vs. Accountant Services
A person who is trained or qualified in performing all account duties can be called an accountant. They can offer their services to many different businesses under the same industry and practice or open up their own accounting firm. An accountant also provides services to their clients other than just the accounts. Additional services may include tax preparation and year-end monetary statements preparation.
An individual who only does bookkeeping can only be hired by a company or an individual who wishes to keep track of money transactions in their business(s). They might not know enough about taxation, business analysis, and other monetary matters. So be sure to ask before hiring them.
A professional accountant, on the other hand, is an authorized professional. They offer their services to all types of businesses in different industries. They are knowledgeable enough in tax preparation and monetary planning for both small and big size businesses. As independent consultants, they can also make recommendations on taxes, accounts, and business decisions.
Bookkeeper vs. Accountant Salary
As discussed above, an accountant has more responsibilities than a bookkeeper could ever think of doing. They should be trained in several concepts like double-entry accounting, monetary statement analysis, cost accounts, taxation laws, financial reporting, and auditing. They also keep the business’s monetary records organized, so those future decisions are based on them.
Accountants often have a lot more responsibilities than bookkeepers. That’s why they get paid higher wages as compared to their bookkeeping counterpart. A bookkeeper only needs to know how to keep the business’s monetary records. They don’t have to know what purpose it serves or how they can maximize its use. Another reason an accountant gets paid more is that they have to go through more education and training. They should be licensed professionals in accounting to make sure that they can offer their consulting services to different businesses under different industries. Also, professional accountants must have relevant certifications such as CPA or CIA from a certified body.
Accountants work to ensure that the business’s monetary status, especially when it comes to cash flow, is maintained daily and monthly. Accounting is used to make essential business decisions. Bookkeepers work under the supervision of accountants, and they only perform basic bookkeeping activities like payrolls, cash receipts, check payments, and balance sheet preparation. They also provide financial reports to executives, but these reports are not used to make significant decisions.
The main difference between a bookkeeper and an accountant is that the bookkeeper simply keeps records of monetary transactions while the accountant uses accounting information for decision-making purposes. No matter if you’re looking for bookkeeping or accounting services, Allied Accounting offers both! Call us or visit our website to find out more about our services!
Should I Get a Bookkeeper or an Accountant?
It all depends on how complicated your business is and what kind of work it involves. If you are still new in the business world, your best option would be to hire a bookkeeper. You can decide if you want to hire an accountant after they have completed their tasks.
When should I seek accounting help?
If your business has already been established and shows signs of growth, you should set up an accounting department. That way, your manager or financial team leader will have better reports to ensure that the company’s daily operations are going well.
What is the difference between an accountant and a bookkeeper?
First of all, an accountant has more responsibilities than a bookkeeper. The board of directors should appoint them to ensure that they can manage their duties properly. Another important distinction between them is that a professional accountant needs further education and training while a bookkeeper does not.