A bookkeeper and an accountant have very similar roles and it can be confusing to know what each does. In this post, we’ll show you the differences between the two jobs which will hopefully allow you to make a decision on whether you need one or the other – or both!
An entrepreneur usually starts a business with the dream of growing it so it can run autonomously or it can eventually be sold. However, to achieve success, a businessperson has to have strong operations and financials in place.
As the business becomes bigger and more complex, the owner will probably not able to handle all the work – and the problems that come with it – by him or herself.
It helps to have a great team in place and often that includes both a bookkeeper and an accountant. Teamwork will lead you to great success as an organization.
While we can’t speak to all aspects of a team in this blog post, we’ll concentrate on two important key pieces that you’ll need.
Do I Need To Hire A Bookkeeper?
Bookkeeping is the process of recording all the financial transactions of a business. If you hire a bookkeeper, he or she will make records of each financial transaction in your business. They will make general ledgers of each transaction or debt in your business.
To put it another way, bookkeeping is the primary stage of an accountant. Bookkeeping is often routine and clerical in nature, so you need a good routine and system in place in order to do it efficiently.
Whereas, accounting is a process of analyzing the records and then creating reports in your business. If you hire an accountant, he/she will analyze and interpret your data (profit, loss, debt, credits).
Accountancy is the second or final stage of bookkeeping. It identifies the sources of financial transactions, records them up in a book, and then analyzes them to make a report of your business. It also communicates the transaction and gives the advice to help you in growing the business.
Both a bookkeeper and an accountant will also suggest tips to grow your business. They will give advice related to the financial investments for your benefit, to achieve success in the business. This means the lines between a bookkeeper and an accountant are often blurred so what really is the difference between the two?
What is the Difference Between a Bookkeeper and an Accountant?
Your financial transactions are one – if not the most important part of a business. An owner should hire a bookkeeper or an accountant (sometimes both) to maintain the work. Now, here many people will ask the question, what the difference between a bookkeeper and an accountant is. It can be confusing if you don’t work within the finical world and people can get the two confused but in fact they are completely different.
A bookkeeper is a person you hire to record each and every transaction of your business. A bookkeeper will maintain a systematic record of all the economic events of the business.
The recording is the main function of the bookkeeper. Bookkeeping is used by only internal users like the owner, manager, and employee. The bookkeeper maintains a general ledger and chart of accounts by recording and categorizing the financial transaction of your business.
An accountant is a person concerned with the last stage of accountancy (the practice of recording, classifying and reporting business transactions). In other words, accountants start at the exact point where bookkeeping ends. Without any records, we cannot think of preparing reports.
Accounting is a broad term that encompasses multiple different job titles and roles within organizations. They will analyze the data or records maintained by a bookkeeper of your organization. Accountancy is always developed by experts and performed by the senior staff of the organization.
An accountant will ascertain the net result of the business. It reveals the operation of the business is facing loss or profit. The accountant will also complete the tax planning for the company. He or she will communicate and discuss the impact of the financial transaction on the business.
Typically, bookkeepers will have earned at least an associate degree and focus on recording financial transactions. Accountants, on the other hand, will have typically earned at least a bachelor’s degree in accounting, and are tasked with interpreting financial information rather than simply gathering it.
In other words, accountants can be bookkeepers but not all bookkeepers are accountants.
Additionally, a certified public accountant (CPA) is an accountant who has passed the CPA exam and has met state licensing requirements. So, all CPAs are accountants, but not all accountants are CPAs.
Accounting is a broad term that encompasses multiple different job titles and roles within organizations. There are three main types of accountants—public accountants, management accountants, and government accountants—all of which focus on different aspects of the profession. Internal and external auditors are also closely related.
Do I Need an Accountant or a Bookkeeper?
It does not matter whether you are running a small or large business. At some point, you will need to hire people to coordinate your work. Hiring the right people will save your time and energy to focus more on your business.
Whether you need an accountant or a bookkeeper really depends on where you are at in your business and at some point, you will need both. A bookkeeper is better for day-to-day transactions and keeping on top of your financial records while in accountants can help you with taxes and sorting out your year end. If you have any questions, please don’t hesitate to ask about the services we provide. We will be more than happy to help you.