There is a lot that goes into owning a business and ensuring the finances are well-managed is important. An accountant and bookkeeper can both play an important role in the financial management of any business. However, the role of each is very different and determining which is appropriate for your business is important.
Accountants and bookkeepers have different educational backgrounds, which means that their day-to-day job and tasks will look slightly different. An account often focuses on the big picture finances, while a bookkeeper is more involved in the day-to-day finances.
The following article will describe the role of an accountant and a bookkeeper to help you determine what role is right for your business. For some businesses, the answer will be both!
What is the difference between an accountant and a bookkeeper?
An accountant is responsible for preparing and maintaining important financial reports, while a bookkeeper is responsible for providing accurate, up-to-date financial information about a business on a day-to-day basis.
A bookkeeper’s main role is to maintain a complete record of all money that goes in and out of a business, which enables accountants to do their job. An accountant is responsible for analyzing the financial data that a bookkeeper records in an effort to turn that information into data that can be used to make reports and forecasts.
Typically, accounting and bookkeeping tasks will look something like this.
| Accounting Tasks | Bookkeeping Tasks |
|---|---|
| Verify and analyze data | Recording and categorizing daily payments and expenses |
| Generate reports | Producing invoices |
| Provide advice on financial decisions | Managing payroll |
| Review and analyze financial statements | Maintaining and balancing ledgers, accounts and subsidiaries |
| Perform audits | Prepare books for the accountant |
| File tax returns, conduct tax planning and provide tax advisory | Conduct bank reconciliations every month |
| Provide information for forecasts, business trends and opportunities for growth | Provide year-end financials and tax documents to the accountant |
| Adjusting entries |
The key difference between an accountant and bookkeeper is the required education for each role. In general, an accountant can be considered a bookkeeper, however a bookkeeper cannot be considered an accountant without the proper credentials and certifications. While both roles typically require a college education, accountants have often obtained additional education and accreditations (e.g. Masters degree or CPA).
Benefits of hiring an accountant
An accountant can help to provide a comprehensive overview of your business’s financial state and provide tailored expertise when it comes to taxes and investments. Although not required, the majority of accountants acquire their CPA certification. Similar to a lawyer or other professional designations, CPAs are licensed and required to follow strict standards that ensure quality and professional services are provided. See more benefits of hiring a CPA.
Benefits of hiring a bookkeeper
A bookkeeper can help get your business’s financial records on the right track and maintain them going forward. A bookkeeper is great for managing the day-to-day finances that are involved in owning and running a business. They will often establish a system that helps to record and organize financial transactions including sales, purchases, payments and receipts.
Accountant or Bookkeeper – What role is right for your business?
There is no simple answer to this question. The right role for your business will depend on your business’s current needs or pain points. If you are looking for someone to handle the day-to-day financial transitions then a bookkeeper is the right choice. However, if you are looking for someone to provide a comprehensive overview of your business’s financial state and turn data into useful information (e.g. generate reports), then an accountant is the right role for your business.
It is common for businesses to work with accountants Cedar Rapids when tax time rolls around, as CPAs have specialized knowledge that can save a business both time and money.
The main difference between accountants and bookkeepers is in the scope of the work they undertake. Accountants focus on the big picture, while bookkeepers handle the day-to-day aspects of a business’s finances. There are definitive advantages to hiring both an accountant and bookkeeper, but ultimately the right role will be determined by your business’s needs.