What’s the Difference Between a Bookkeeper and an Accountant?
Bookkeeping and accounting are both important functions for any business. However, these jobs require very different skill sets, experience levels, and education requirements. A bookkeeper performs financial record-keeping tasks to help companies track their spending and profitability. An accountant, on the other hand, has broader responsibilities that involve advising businesses on how to structure themselves for taxation purposes, as well as evaluating their financial performance and advising them on future strategies. Both a bookkeeper and an accountant can be trusted advisors in your business; however, they have very different roles in your company. Keep reading to learn more about the key differences between bookkeepers and accountants so you’re prepared to hire the right professional when you need one.
What is a bookkeeper?
A bookkeeper is a person who is responsible for recording a company’s financial transactions, such as purchases, sales, and payroll. Furthermore, a bookkeeper can help with other financial tasks, like managing budgets and preparing financial reports for a company’s management team. Bookkeeping is the record-keeping component of a company’s financial activities. Bookkeeping activities include tracking receipts, disbursements, and financial assets, as well as reconciling accounts. Accountants can also be responsible for bookkeeping, but the two professions have different skill sets.
What is an accountant?
An accountant is a professional who prepares financial reports for a company or individual. Accountants may assist with hiring staff, managing the books, and providing advice on taxes and money management. Many accountants have an accounting degree and are licensed to provide advice on complex financial issues, including tax planning and investment strategies. Accountants could have experience as a bookkeeper, but they are much more than just record keepers. An accountant is a business advisor who can also help with tax preparation.
How are bookkeeping and accounting different?
Bookkeeping involves recording transactions in a company’s financial records. The bookkeeper is responsible for reconciling the company’s accounts to ensure that everything is accurate. Because of the close relationship with financial transactions, bookkeeping may also include record-keeping for a company’s accounts payable and accounts receivable. Accounting, on the other hand, is a broader term that includes bookkeeping. It also includes evaluating financial performance and advising businesses on how to structure themselves for taxation purposes. Accounting includes forecasting future business activities, evaluating past performance, and advising management on how to improve future results.
Key Differences Between Bookkeeping and Accounting
- Bookkeepers only record and reconcile a company’s financial data, but accountants design financial statements that contain that data.
- Bookkeepers prepare reports on financial transactions and expenditures, but accountants look at the data in more detail and use it to forecast future performance.
- Bookkeepers use a cash-based system, but accountants use a double-entry system.
- Bookkeepers’ work focuses on the present, but accountants’ work focuses on the past, present, and future.
- Bookkeepers track the movement of money, but accountants use that data to forecast financial performance.
How to Hire a Bookkeeper or Accountant?
When it comes to hiring a bookkeeper or accountant for your business, it’s important to remember that the right fit is crucial. Make sure to ask candidates questions that will help you determine if they’re a good fit for your company before you make a decision. Before you hire a bookkeeper or accountant, make sure that you understand the difference between the two and the roles they play in your business. You want to be sure you’re hiring the right person for the job so you can ensure your financial records are being properly managed.
Accounting and bookkeeping are different aspects of financial management, but both are important to running a successful business. If you are looking for bookkeeping or accounting services, it’s important to hire the right professional for the job.