Bookkeepers and Accountants are both essential functions in the world of finance. Many people are often given the assumption that they do the same job, but they do not. Bookkeeping is responsible for recording transactions, which is more on the administrative side while accounting is responsible for interpreting, classifying, analyzing, reporting and summarizing financial data, which is more subjective than bookkeeping.
In this article, we’ll explain an in-depth difference of Bookkeepers and Accountants.
The Difference between Accountants and Bookkeepers
The function of a bookkeeper
Typically, a bookkeeper is tasked to do the following:
- Recording financial transactions
- Posting debits and credits
- Producing invoices
- Maintaining and balancing subsidiaries, general ledgers, and historical accounts
- Completing payroll
The task of the bookkeeper can be more complex if the size of the business is large and more financial transactions are coming. For small businesses, some owners do the tasks themselves. Bookkeepers usually have a ledger which contains the records of all sales and purchases made by the business or the company.
The function of an Accountants
Compared to a bookkeeper, the function of an accountant is highly transactional. An accountant is in charge of processing the financial information prepared or compiled by the bookkeeper. The following are the tasks delegated to an accountant:
- Preparing adjusting entries (recording expenses that have occurred but aren’t yet recorded in the bookkeeping process)
- Preparing company financial statements
- Analyzing costs of operations
- Completing income tax returns
- Aiding the business owner in understanding the impact of financial decisions
After processing all the financial information, the accountant produces a report which interprets all of the key financial indicators, thus results in a better understanding of profitability and cash flow in the business. Most of the time, business owners seek advice from accountants for financial strategy and tax filing.
Bookkeepers vs Accountants
Knowing the difference between bookkeepers and accountants is important to every business owner. By determining their functions and differences, the owner will know how to use each function and if it is really needed by their business.
- To be a professional bookkeeper, one must have 2-4 years of experience or had taken a few accounting courses. However for an accountant, one must have at least a bachelor’s degree in accounting. For those that don’t have a specific degree in accounting, finance degrees are often considered a substitute.
- Unlike bookkeepers, accountants are eligible to have additional professional certifications. For those accountants who have enough experience and education, they can obtain the title of Certified Public Accountant or CPA. To become a CPA, an accountant must pass the Uniform Certified Public Accountant exam and have enough experience as a professional accountant.
- Bookkeepers are tasked to record financial transactions, while accountants are in charge of the entire accounting process. Most of the time, an accountant or the business owner is the one who checks the book keeper’s work.
“To sum it all, bookkeepers are in charge of recording, while the accountants do the analyzing. Although some business owners opted to do the financial management themselves, the majority preferred to hire a bookkeeper or an accountant professional for their credibility and accuracy. With this, the owners can focus more on other aspects of their business, such as customer service and marketing. Investing time and money in financial management is really worth it- it will surely help your business grow and improve in the coming years.”