In this article, we’ll break down the seven differences between a bookkeeper vs accountant, including their roles, functions, and salary. Keep reading to find out more.
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In this article:
- Why People Confuse Bookkeepers for Accountants and Vice Versa
- Bookkeeper vs Accountant: How They Differ
Bookkeeper vs Accountant Job Description
Why People Confuse Bookkeepers for Accountants and Vice Versa
As both professions engage in managing finances, a lot of people may confuse a bookkeeper for an accountant, and vice-versa. While they work towards a common goal, bookkeepers and accountants support the business in different ways, and in different stages of the financial process.
It’s important to know how these two jobs differ, as they’re both essential to the success of the business. Their functions sometimes overlap as well, because bookkeeping is one part of the whole accounting process.
In this guide, we’ll explain the differences between bookkeeping vs accounting in key areas that define these functions.
Bookkeeper vs Accountant: How They Differ
Anyone can become a bookkeeper. That’s because formal education isn’t required to pursue a career in bookkeeping.
Yet as with any role, there are basic skills you need to acquire and hone to succeed as a bookkeeper, such as:
- Organizational skills
- Good communication skills
- Attention to detail
- Thoroughness and accuracy
Having a background in accounting is a plus for a bookkeeper, as it’ll come in handy for the tasks you’ll take on.
Even if you don’t have previous related experience, you can learn how to become a bookkeeper by taking courses. Comprehensive online courses like the Bookkeeper Business Launch will even teach you how to start your own bookkeeping business.
Typically, accountants, and sometimes even business owners, oversee bookkeepers’ work as their function has certain limits.
Unlike bookkeepers, accountants start off by getting a formal education. It could be a bachelor’s degree in accounting or a degree in finance.
This is one of the reasons why pursuing a career in accounting is a bit more challenging.
Ultimately, what strengthens your credentials are sufficient experience and a good track record, either in bookkeeping or accounting.
Bookkeepers organize the finances by ensuring that each transaction is well-documented. They’re involved with the business’ day-to-day operations.
Accountants come in to provide financial analysis based on the bookkeeper’s data. They may not be as involved with business operations, but accountants are essential to supplement the bookkeeper’s work.
These roles both fall under accounting, and they both work towards the same goals. Yet as mentioned earlier, they serve the business in different stages of the financial process.
- Bookkeepers mainly record and manage daily financial transactions.
- On the other hand, accountants are the best consultants when it comes to tax filing, financial analysis and strategies, and financial forecasting.
Having organized finances is essential to a business’s success. It also keeps business owners from incurring unnecessary liabilities like debts and unpaid bills.
These are what bookkeepers work towards. In a nutshell, bookkeeping involves the following functions:
- Recording daily financial transactions like sales and payments made
- Maintaining the general ledger, general ledger accounts, and journals
- Creating financial reports
- Collecting payments from customers
- Completing payments for employees, suppliers, and creditors
- Managing the inventory and cash flow
General Ledger Accounts Definition: Also known as sub-ledgers, this is where you record business transactions as they come. You’ll commonly find accounts receivable, accounts payable, cash, and inventory under the subsidiary ledgers.
Journal Definition: This refers to the cash sales and cash disbursements journals, where you document the business’ revenue and the expenses paid, respectively.
The general ledger is important to bookkeepers. This is the master file where they record or post, and keep track of sales and expenses. Ledgers can come in the form of a computerized spreadsheet, a software, or even on paper.
There are two types of bookkeeping: single- and double-entry bookkeeping systems. Single-entry is ideal for non-complex transactions, while double-entry caters to more complex transactions common with larger companies.
It’s the bookkeeper’s task to record all the sales and purchases the business made in the ledger and to provide the supporting documents needed.
Accountants rely on the accuracy of the financial information provided by the bookkeeper or business owner to do their job well. Their financial analyses and strategies are only as good as the data they’re provided with.
Accounting is more subjective, while bookkeeping is more transactional in nature. An accountant’s job includes:
- Analyzing the data in the bookkeeper’s financial reports
- Acting as a consultant in decision-making
- Making financial forecasts and recommending strategies
- Preparing financial statements
- Filing taxes
RELATED: How To Become A Bookkeeper At Home
4. Documents Prepared
Even in the documents they prepare, there are differences between a bookkeeper vs accountant.
Bookkeepers create the Balance Sheet and Income Statement. They’re in charge of balancing the books, which means carefully recording and monitoring assets, liabilities, and equity.
To make sure that the books balance, they apply the accounting equation:
Assets = Liabilities + Equity
This formula balances the assets (what the business owns) against liabilities and equity (claims on the business).
The Income Statement covers the following:
- Revenue: The income the business received when they sell products and services.
- Costs: The money the business spent to produce their products and services.
- Expenses: The money spent to ensure that business operations run smoothly (e.g. payroll).
Accountants prepare the Financial Statements. Their role is to analyze financial data, and they do this by identifying key financial indicators to reveal the big picture and show how the business is progressing.
With the help of accountants, business owners learn to understand their cash flow and how profitable they actually are.
5. Roles in Tax Filing
Tax strategy and planning, as well as tax filing, are tasks often done by accountants. Bookkeepers prepare the information and documents that accountants need come tax season.
They work hand-in-hand to ensure that the business complies with all legal and reporting requirements. This includes submitting documents and paying for local, state, and federal taxes on time.
Both bookkeepers and accountants are eligible to become professionally certified. Bookkeepers have two options when it comes to certification, and they can obtain these through examinations.
- The National Association of Certified Public Bookkeepers (NACPB) grants the Certified Public Bookkeeper (CPB) title. This is a license recognized in the United States.
- The American Institute of Professional Bookkeepers (AIPB) grants the Certified Bookkeeper (CB) title.
Accountants can become a Certified Public Accountant (CPA) by passing the Uniform Certified Public Accountant exam. Having professional experience as an accountant is also a must.
7. Bookkeeper vs Accountant Salary
The salary range for bookkeepers and accountants differ per state and on other important factors. But typically, accountants earn more than bookkeepers, and their midpoint salary is higher.
To gain an idea of how much these two professions earn in your area, you can refer to the 2020 Robert Half Salary Guide.
Their Accounting and Finance salary guide gives you a customized salary target based on the following factors:
- Area of specialization
- Job category
- Job title
You can use this as a reference to set a competitive rate or asking salary and to ensure that you’re paid accordingly.
These are the main differences that set apart a bookkeeper vs accountant. These areas define the roles and functions of bookkeeping vs accounting and show why they’re both essential to the business.
By knowing these, you can delegate tasks properly and ensure that you cover all areas of the business’ finances.
What more would you like to know about bookkeeping and accounting? Tell us in the comments section below!