The terms accountant and bookkeeper have been used interchangeably but both have certain differences which are important to know. A bookkeeper is someone who keeps records of all financial transactions that happen in your business. They maintain information such as expense receipts in a general ledger while also generating invoices, coordinating payroll, and recording income.
An accountant, on the other hand, generally has more formal training and assesses data maintained by the bookkeeper and offers financial guidance pertaining to your business. They examine business trends, perform audits, develop financial reporting records, and verify financial data. Whether you need a bookkeeper or an accountant depends on the size and needs of your business.
Differences Between Accountants and Bookkeepers
Accountants require an educational degree such as a bachelor’s or master’s degree in accounting. It is possible to substitute these degrees with an associate degree in finance. On the other hand, bookkeepers are not required to have certain degrees but have to be knowledgeable, methodical, and accurate. While accountants may obtain further qualifications such as a CPA, bookkeepers are not eligible to avail of professional certifications but can get licensing and accreditation.
Accountants are more involved in working with senior management professionals in reporting their analyses, whereas bookkeepers are not directly involved. Since the work of an accountant demands specialized skills, they are more capable of making sound financial decisions. Bookkeepers, however, do not make similar decisions on the basis of their record maintenance work.
Accountant or Bookkeeper: Which is Best for Your Business?
Ultimately, both accountants and bookkeepers can benefit your business. With technological advancements, both functions are becoming more efficient. When you start a business, you will need to perform accounting tasks which can be simplified if you allow a bookkeeper to keep records of your financial data. Your growing business will eventually need the expertise of an accountant for making complex financial decisions. Oftentimes, the decision between the two comes down to your comfort with interpreting financial data. While a bookkeeper will enter transactions and ensure your books are up to date, an accountant can provide deeper insight into your financial results. If you are comfortable with reading financial statements and understanding cash flow, then a bookkeeper may be what is best suited for you. However, if you would like guidance on financial matters, an accountant can provide this service.