Bookkeeping and Accounting are part of the same profession and are often confused as the same thing, however they are different activities. Bookkeeping is transactional and administrative record keeping while accounting is the practice of reading insights from the data entered by the bookkeeper. Bookkeeping facilitates accounting. Both fields have been around for a very long time and are widely useful in all businesses.
Bookkeeping and accounting are the foundation for great financial strategy for all sized organizations. There can be no data-driven business decisions unless there is an accurate record of all the daily transactions. Think of bookkeeping as the foundation. From there, the accountant will verify and analyze the data to provide financial information to decision makers.
Accountant Vs Bookkeeper, What’s The Difference?
If you are trying to decide which to hire for your business, there are key areas of differences between bookkeepers and accountants. An accountant can be considered a bookkeeper, but a bookkeeper can never be considered an accountant without proper certification.
There is no formal education required for bookkeepers. Because of this, their duties are limited, and their work is overseen by either an accountant or you, the small business owner. Accountants, on the other hand, have varying degrees of licenses and certifications. To become an accountant, the individual typically must earn a bachelor’s degree. Depending on their experience, most accountants do not need direct oversight.
As a business owner, you’ll want to consider the cost of each of these positions. Hiring a bookkeeper is going to be less expensive but require more oversight from you. An accountant is going to cost more but need less of your time (one solution to this dilemma is CFOshare’s fractional accounting solution.) Before deciding, ask yourself how much time you have available to manage another team member and your business needs right now.
Below is a table highlighting the differences.
|Objective||Record all financial transactions||Summarize and interpret financial transactions|
|Certifications||Highschool diploma||Bachelor’s degree and/or CPA license|
|Skills||– Attention to detail
– Data entry
– Computer skills: Spreadsheets and bookkeeping software
|– Generate financial reports
– Provide information for forecasts, business trends and opportunities for growth
– Inform the business owner
|Cost* based on 2019 BLS data||$41,230 annually or $19.82/hr||$71,552 annually or $34.40/hr|
Not sure what’s right for your business? Check out our small business finance and accounting assessment to see if your current team is meeting your needs.
What Are the Duties of a Bookkeeper?
A bookkeeper’s main objective is to keep the records of all financial transactions. Bookkeeping has been around since commerce began and all the comings and goings of a business need to be kept in an easy-to-read manner.
Typical bookkeeping tasks can include:
- Recording all financial transactions in accounting software
- Balancing ledgers, accounts, and subsidiaries
- Bank reconciliation
- Managing and running payroll
- Managing accounts receivable and accounts payable
- Invoicing customers
- Paying vendors
What Are the Duties of an Accountant?
Accountants are looking at the bigger picture. They produce the financial reports, highlight key aspects, and deliver a complete picture of where your finances stand and what they mean. Accountants are also responsible for managing bookkeepers, verifying the accuracy of their work, and ensuring proper checks-and-balances are in place to prevent fraud. There is a difference between an accountant and a certified public accountant (CPA). Although both can prepare your tax returns, a CPA is more knowledgeable about tax codes and could represent you in the event of an audit.
Typical accounting tasks can include everything a bookkeeper can do plus:
- Completing a month-end close, unassisted
- Analyze the cost of operations
- Fixed asset tracking
- Preparing complex accrual schedules, such as depreciation schedules
- Supervising/managing other clerks and junior bookkeepers
- Preparing the monthly trial balance and financial statements
Should I Hire a Bookkeeper or Accountant?
As a business owner, you will want to leverage talent and strategic hires to foster growth. To hire full time, you will want to source candidates with care and assess your current overhead spend to determine if a full-time hire is needed right now.
Many companies find outsourced bookkeeping and accounting services, like CFOshare, to be a seamless and affordable way fill talent gaps while they decide if promoting within or hiring full-time in the future will continue to foster growth.
At CFOshare, our experience shows that it is more cost effective to employ a junior bookkeeper and outsource an advisory role, like a fractional controller, until after your business clears $6 to $8M in annual revenue.
CFOshare provides expert accounting and bookkeeping services that are customized to the needs of your business. Contact CFOshare today to discuss your firm’s needs and goals.