There are 1.3 million accountants and over 1.7 million bookkeepers in the United States. While many people assume these jobs are the same, there are big differences in how these roles can aid your business finances.
Read on to learn the key differences between an accountant vs. bookkeeper and what each can do for your finances.
Difference Between an Accountant vs. Bookkeeper
Accounting basically deals with the financial health of a business. It involves recording financial transactions, along with storing, retrieving, summarizing, and presenting the results in a variety of reports and analyses.
An accountant can assess the assets, cash flow, and even the liabilities and future position of an organization.
On the other hand, bookkeeping deals with the storing, recording and retrieving of financial transactions on a day-to-day basis. A bookkeeper allows an individual or company to understand their exact financial state so that they can make key decisions about investments, finances or operations.
So, in a nutshell, bookkeepers work with the transactions while an accountant will use the information a bookkeeper gathers to analyze the current and future financial status of a company.
Now let's look more closely at the job duties and qualifications for an accountant vs. bookkeeper.
Bookkeeper Job Duties
A bookkeeper handles the books. He or she will ensure that all transactions are recorded.
The specific duties of a bookkeeper might include the following tasks:
- Creating and sending invoices
- Issuing receipts
- Issuing payroll
- Posting debits and credits
- Sending payments to suppliers
Accountant Job Duties
An accountant focuses on the long-term goals of an organization. He or she will create financial goals and recommendations to help the business progress financially.
Accountants provide consultation, analysis, and can advise on tax matters.
Some of the job duties of an accountant include the following:
- Preparing various financial statements such as cash flow reports and earnings projections
- participate in the company's budget planning
- Preparing and filing taxes (income, sales and payroll taxes)
- Advise the company on consolidating debt or making investments
- Create reports and models to demonstrate profitability and growth
Bookkeeper Credentials
A bookkeeper needs to have a good grasp of finances in order to know which details to record. They must be meticulous, accurate, and well-organized. Ideally, they are knowledgeable about certain key financial topics.
Yet, formal education isn't a requirement. Although, most bookkeepers have an associate’s degree.
Often, the work of a bookkeeper is overseen by an accountant or a small business owner. Get more information about bookkeepers.
Accountant Credentials
In order for someone to call themselves an accountant, they must have a bachelor’s degree in accounting. Some people with a finance degree might also call themselves an accountant.
Accountants are able to earn additional professional certifications. Those who have the right education and enough experience can obtain the title of Certified Public Accountant (CPA) by passing an exam. This is a common accounting designation.
We hope by now you can see the difference between an accountant and a bookkeeper. Now, the big question is does your company need both?
Do You Need a Bookkeeper and an Accountant?
How do you know when to hire a bookkeeper and when you need an accountant?
Well, think of it as the difference between hiring a carpenter and an architect when building a house.
An accountant will help you get a clear idea of the big picture of your financial situation. He or she will give you valuable, actionable advice. Your accountant will also file your company's taxes and create important financial documents.
When tax season is over, an accountant can still be valuable in helping you choose the right financial strategies especially if you are a small business or entrepreneur.
On the flip side, a bookkeeper will keep the wheels turning. He or she will make sure employees get paid, fill out the right forms, file all your company's paperwork, submit invoices and pay the bills as well as track all your expenses.
The work of a bookkeeper means that when tax season comes around, you are ready with all your info recorded correctly in the right software like QuickBooks.
Consider Your Needs
Depending on the size of your business, you might need one or both. Of course, large companies have both an accountant and a bookkeeper on staff.
Yet, if you aren't there yet, remember that you can always outsource specific tasks or hire part-time.
When to Hire a Staff Accountant or Bookkeeper
If you are an entrepreneur or a small business, you can likely outsource both roles for a long time.
As a general rule, once you have over 30 employees or have a revenue of over $1 million, you probably don't need a dedicated full-time accountant. Yet, a part or full-time bookkeeper is a smart option if you have trouble staying on top of your records and incoming and outgoing bills.
These days there is so much flexibility in terms of hiring help. You can hire freelance, part-time, or even on a contract basis.
You can find a staffing solution that fits for you so you don’t have to try to do all the accounting or bookkeeping yourself.
Final Words On First-Rate Finances
There you go! We hope this article has helped you gain an understanding of the differences between an accountant vs. bookkeeper for your business financial management.
Be sure to come back for new content to help you in your business. Visit the Finance and Investing sections of Bootstrap Business right now!
