What Is The Difference Between A Bookkeeper and An Accountant?
What would your answer be if someone were to ask you the difference between an accountant and a bookkeeper? Chances are, the answer to this question would not be obvious to most. A large majority of people who aren’t involved in the industry often confuse one for another or assume that they are both the same process. Whilst accounting and bookkeeping are both vital processes to running a successful and healthy business, they each have their own individual part to play. In today’s article, we have a look at what the difference is between a bookkeeper and an accountant.
What Does a Bookkeeper Do?
A bookkeeper is someone who is in charge of recording financial transactions in a business and is instrumental to the upkeep of your business finances. This can include purchases, payments, sales and receipts. A bookkeeper’s responsibilities include recording financial transactions, balancing the ledgers, historical accounts and subsidiaries as well as reconciling accounts, preparing initial financial statements and calculating tax.
Bookkeepers handle a variety of tasks and at the center of a bookkeeper’s job is the maintenance of the general ledger. This is a document that records the day-to-day financial transactions. A bookkeeper’s goal is to ensure that all these records are kept proper and systematic.
Often times, in order to qualify as a bookkeeper, an individual will have to take a few accounting courses and develop a basic understanding of accounting in order to secure a job.
What Does an Accountant Do?
An accountant is someone who analyses, summarizes, interprets and communicates financial transactions that are classified in the ledger account. An accountant’s primary focus is analyzing financial transactions and business reports following accounting principles, standards and requirements. An accountant carries out analysis of the operational costs of running a business, completes tax returns on behalf of the business and can assist business owners in further understanding the impact of their financial decisions.
An accountant seeks to provide reports that gather the financial indicators of a business. An accountant’s main aim is to deliver a better understanding of a business’ profitability and bring awareness to issues such as cash flow. Accountants also assist by providing business owners with financial forecasts and business establishment assistance.
Unlike bookkeepers, accountants have to go through up to 4 years of schooling to earn a bachelor’s degree or master’s degree in the field before securing a position in an accounting firm. Even so, most accountants start off as junior internal auditors or staff accountants before they are able to be promoted to senior accounting positions.
Why Can’t I Just Use an Accountant Solely?
Whilst there are no rules entailing that you can’t use an accountant for both bookkeeping and accounting, it is important to note that there is likely to be a substantial difference in fees charged by bookkeepers and accountants. In order to maximize the potential of your budget, we highly recommend using both a bookkeeper and an accountant simultaneously. Both individuals will be able to bring their own expertise to the table, thus ensuring that your business finances are being handled in the most efficient and effective ways possible.
Both bookkeepers and accountants play a vital part in the financial health of your business and both bring different skills and expertise to the table. When both work hand in hand, you can be sure that your business finances are in good hands. We hope that this article has given you some valuable insight into the differences between a bookkeeper and accountant along with the services they can offer both you and your business growth.