The Difference Between Bookkeepers and Accountants
Still stumped on how to handle bookkeeping vs. accounting tasks for your small business? Small business accounting software like QuickBooks helps you track your business finances all in one place, making it easily accessible to you and your accounting team. The transactions that you record in your bookkeeping are also the foundation of your accounting. Accounting practices require the pulling and analysis of financial data—in other words, everything that’s recorded in your ledger, among other financial transactions like loan disbursements or payments. When most people think about the difference between bookkeeping and accounting, they are hard-pressed to nail the distinction between each process. While bookkeepers and accountants share common goals, they support your business in different stages of the financial cycle.
Usually, the bookkeeper’s work is overseen by either an accountant or the small business owner whose books they are doing. Bookkeepers and accountants sometimes do the same work, but have a different skill set. In general, a bookkeeper’s role is to record transactions and keep you financially organized, while accountants provide consultation, analysis, and are more qualified to advise on tax matters.
What Does a Bookkeeper Do?
Business owners will often look to accountants for help with strategic tax planning, analysing their financial position, forecasting, and tax filing. There’s also a blurring of roles, with some accountants providing bookkeeping services and some bookkeepers giving strategic business advice. Plus, today, most bookkeeping software can create financial statements—a task usually reserved for accountants. Accountants use bookkeeping records to assess big-picture finances and make smart business decisions. They also provide insights about the company’s overall financial health to business owners and other stakeholders. Accounting focuses on using that data to assess the financial health of a business and make data-driven business decisions.
And, of course, all companies need to file taxes, which can become extremely complicated as your business grows. A trusted accountant can help guide you through that process and help handle any audits that may arise. While a bookkeeper can help with the precise details of the business, an accountant is better suited to do bigger-picture analysis and strategic bookkeeping vs accounting planning. Your accountant will also use information from the ledger to prepare your tax documents, so it is crucial the two roles work together for accurate IRS reporting. Think of your bookkeeper as the one building the foundation of your businesses finances, and your accountant as the architect who designs a house around it, inspecting the foundation.
Maintain journal entries and the general ledger
In addition, you must be a member of the Association of Certified Fraud Examiners. In most cases, employers want to hire someone with a bachelor’s degree, and a master’s degree may help boost your earnings.
A bookkeeper is the person on your team who handles your business’s books the most. They are responsible for maintaining the ledger, whether that’s analog or via an automated accounting software, and ensures the books stay balanced. And a Certified Public Accountant, or CPA, is an accountant who has taken a test called the Uniform CPA Examination and met your state’s requirements for state certification.