The Difference Between “Bookkeeper” & “Accountant” Small Business Accounting

The salary ranges are not specific to students or graduates of University of Phoenix. Actual outcomes vary based on multiple factors, including prior work experience, https://www.bookstime.com/ geographic location and other factors specific to the individual. University of Phoenix does not guarantee employment, salary level or career advancement.

Accountants are largely responsible for the financial health of a business. If they notice expenses are going over budget or under budget, they can look into what’s causing this discrepancy and make recommendations to resolve these problems. However, if you need insight and advice on how to better operate your business at scale…you will need help from an accountant. Most people would be hard-pressed to describe the difference between an accountant and a bookkeeper. A bookkeeper usually performs these steps, however, an accountant may step in to complete these tasks, or oversee them as they’re completed by the bookkeeper. If you are proficient and comfortable using mathematics and computing figures, plus punctual, organized, and detail-oriented, it is not hard to learn how to be a bookkeeper.

Importance of good records

Both processes deal with financial statements and processes, with each professional having different credentials and skill sets. A notable factor in hiring bookkeeping and accounting professionals is that it can be seen as a real investment, and it often brings you more in revenue and savings than you end up paying. Proper financial management, as well as diligent record-keeping, is crucial for businesses. When you have an established business, even a small one, having the two work together can allow you to feel secure, knowing that financial experts are making sure your business stays in perfect shape. All small-business owners should consider hiring a professional accountant to handle their tax returns, at the least. When it comes to bookkeeping, some business owners choose to manage those tasks themselves.

Today, we’ll go over the differences between bookkeeping and accounting so that you can figure out how to allocate resources effectively. 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. Bookkeepers might prepare and reconcile statements like 1099s and W2s, but the accountant actually files the taxes. Accountants also project estimated tax payments and work to minimize tax liability.

What does an accountant do?

In their turn, accountants consult businesses based on those statements and help with taxation. Typically, professionals in bookkeeping and accounting spheres work together. The first thing to figure out is whether you need an in-house bookkeeper or an outsourced one. Typically, businesses hire in-house financial specialists when there’s a lot of payroll and invoices to process. If you’re a small firm that doesn’t do a great deal of payroll, you can start by outsourcing bookkeeping services to someone who would update your books, ideally every month. Caryl Ramsey has years of experience assisting in different aspects of bookkeeping, taxes, and customer service.

Instead, an accounting firm may hire an in-house bookkeeping team or partner with their client’s bookkeeper to provide business owners with the expertise and financial support they need. They may also pursue certifications to demonstrate they have the expertise required to serve their clients. Other bookkeepers get certified in the bookkeeping software they use with clients.

Accountant Role

Now that you know the functions of bookkeeping and accounting as well as a little bit about their history, let’s discuss what the day-to-day responsibilities of a bookkeeper and accountant look like. While there are duties that overlap between bookkeepers and accountants, accountants usually hold degrees and certifications, while bookkeepers may have a two-year degree or none at all. Young businesses often get away with doing their accounting and bookkeeping responsibilities themselves. In the long run, however, it wouldn’t be financially wise to continue doing that, as many errors might creep in, potentially costing you money and time. The United States doesn’t have a standardized qualification for practicing bookkeepers. The U.S. Bureau of Labor Statistics states that those practicing bookkeeping should hold at least a high school diploma, but usually have postsecondary education.

Bookkeepers are responsible for entering the data into the books and keeping the records up to date. It involves tracking all income and expenses, paying bills, invoicing, tracking payroll, etc. The demand for qualified employees is another area where accounting and bookkeeper careers are very different. According to BLS, the demand for bookkeepers is predicted to fall by 5% between 2021 and 2031 as financial software becomes more advanced. Business owners will probably still have bookkeepers, but fewer employees will be able to manage record-keeping operations.

Skills Needed

Getting taxes prepared for your LLC might fall on the low end, while building out a full reporting suite could run you hundreds of dollars per hour. In that case, a bookkeeper is going to add the most value to your business. You need a person who can put their head down, do the math, and sort that bag of receipts into something meaningful.

It also offers a payroll certification, which requires additional education. Bookkeepers handle the day-to-day tasks of recording financial transactions while accountants provide insight and analysis of that data and generate accounting reports. Although nonprofit bookkeepers and accountants are so frequently lumped into the same category, it’s important to remember the key differences between the two. These differences will help determine the best hiring choices to meet your nonprofit’s needs. Bookkeepers and accountants have a mutual aim to help businesses stay on top of their financial record-keeping, tax filing, and overall financial health. Bookkeepers usually record business transactions in the books, ensuring accuracy and correct categorization.

She is a former Google Tech Entrepreneur and she holds an MSc in International Marketing from Edinburgh Napier University. Julia is a writer in New York and started covering tech and business during the pandemic. Bookkeepers also post transactions using journal entries that track all account activities. Industry newcomers tend to use the terms “bookkeeper” and “accountant” interchangeably, but there are a few important distinctions between the two. 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.

• Accountants make more due to their educational background and if a CPA, their certification.
• The BLS notes that job growth for accountants should track fairly closely with the broader economy.
• You can also look at the American Institute of Certified Public Accountants to find CPAs with skills in certain areas, such as employee benefits or personal finance.
• Poor financial management is one of the leading reasons that businesses fail.
• When deciding whether you should hire an accountant vs a bookkeeper, the answer will depend on what kind of help your business needs.

Students with eligible credits and relevant experience on average saved $11k and 1 year off their undergraduate degree with University of Phoenix. Kelly is an SMB Editor specializing in starting difference between bookkeeping and accounting and marketing new ventures. Before joining the team, she was a Content Producer at Fit Small Business where she served as an editor and strategist covering small business marketing content.