Indeed, it’s common for people to assume the two are the same or that one is not necessary if you have already hired the other. However, you’re about to discover that despite the similarities, there are clear and important distinctions between the two.
It’s worth pointing out that the first difference a business owner should take note of is the contrast in cost. Hiring an Accountant will likely be more expensive compared to the cost of a Bookkeeper. Why is this? To be an Accountant you need to at least have a Bachelors in Accounting. Bookkeepers may have a high school diploma, certificate, or even some college, but no degree is required. Thus, Accountants can charge higher hourly rates.
Let’s look at some of the other differences.
Understanding the Differences Between Bookkeeper and Accountant
As already mentioned, to be a Bookkeeper you don’t need a degree or certificate, though this may help. Instead, you may require training, certain knowledge, and an understanding of the systems used by the company. Thus, a Bookkeeper has a specific set of tasks and day-to-day activities. Ultimately, a Bookkeeper’s role will be to maintain the financial records of the company by tracking money moving in and out of the business.
In contrast, an Accountant’s role is to handle the finances at a higher level. They don’t simply manage and record. They explore your business finances, make projections and provide advice that can benefit you. They turn the data the Bookkeeper records into usable information for business planning. It is for this reason that Accountants are required to have a degree.
Tasks For Bookkeepers And Accountants
The best way to understand the difference between the two is to be aware of the tasks they fulfill.
Bookkeeping tasks are less involved and can be repetitive. They may include:
- Preparing and sending invoices
- Recording changes to inventory
- Reconciling bank and credit card statements
- Processing accounts payable
In contrast, the responsibilities of an Accountant can be more involved and may include:
- Financial forecast building
- Structuring and forming financial statements
- Forming a budget and analyzing expenses
- Preparing tax documents for your Tax Accountant or CPA
Are Both Individuals Necessary?
While Bookkeepers are typically completing tasks that are essential for the business on a daily basis, accounting tasks are not day-to-day activities. The tasks of an Accountant, such as managing tax documents, for instance, can be more specialized and will occur at the end of a fiscal year.
It is crucial to hire a Bookkeeper because, without the help of one, an Accountant will not have the accurate records necessary to complete some of their own tasks, such as financial forecasting. While it is possible to use an Accountant for bookkeeping tasks, you will typically pay a higher rate for jobs that a Bookkeeper could perform at a lower rate. You might want to consider hiring a virtual bookkeeping firm to handle these day-to-day tasks, and keep your Accounting in-house.
Ultimately, filling both these roles in your business will keep your company running smoothly with the two levels of finances handled correctly.