Unlike bookkeeping, which is all about crunching numbers, accounting is more subjective. A bookkeeper’s job is to maintain a complete record of a business’ financial affairs; of the money moving in and out of that company. Bookkeepers record daily transactions clearly and consistently, enabling accountants to do their jobs. As a business owner, you’ll have heard of both but might be fuzzy on what the two tasks (or services, if you hire a professional) involve. Other bookkeepers get certified in the bookkeeping software they use with clients. Unlike accountants, bookkeepers don’t need specific licenses, certifications, or formal education.
Should you hire a bookkeeper or an accountant?
- At a minimum, an accountant must have a bachelor’s degree in accounting.
- These are key skills for bookkeepers, so if you’re not a fan of math at all, it may not be the best career path.
- If you’re searching for accounting software that’s user-friendly, full of smart features, and scales with your business, Quickbooks is a great option.
- Being able to generate the standard business reports and statements required by businesses and the IRS.
Below, we’ll walk you through three signs it might be time to hire a bookkeeper or an accountant to help you manage your books and plan for the future. They perform consistent, routine calculations, often using preaccounting software, to ensure transaction histories are accurate and ready for analysis, but they don’t do the analyzing themselves. Now that you understand how bookkeeping and accounting differ, it’s time to decide which one is right for your business. While this decision is personal and depends on your needs and business goals, here are some signs it’s time to outsource your bookkeeping and accounting needs.
If you need help beyond crunching the numbers, hiring an accountant is probably the wiser move. An accountant will be able to help you with the bookkeeping and offer you advice on how to manage your finances more effectively to be more successful. Bookkeeping refers to handling the day-to-day tasks of recording financial transactions. Accounting involves analysing that data to provide financial insights. They analyze the financial data recorded by bookkeepers to provide insights and strategic advice.
Accountants are largely responsible for the financial health of a business. If they notice expenses are going over budget or under budget, they can look into what’s causing this discrepancy and make recommendations to resolve these problems. A bookkeeper cannot call himself a CPA (Certified Public Accountant) unless he achieves the designation. A CPA is earned after completing specific educational and work requirements, and passing an exam. Being able to generate the standard business reports and statements required by businesses and the IRS. A bookkeeper also has a duty to keep the information he processes confidential, as he will be privy to sensitive financial information, including payroll salaries.
Key Differences
A bookkeeper is skilled at keeping documents and tracks a wide net of financial information. As an accountant, you must pay attention to figures and financial details, but it is more essential to possess sharp logic skills and big-picture problem-solving abilities. While bookkeepers make sure the small pieces fit correctly into place, accountants use those small pieces to draw much more significant and broader conclusions about a company’s finances. Both accountants and bookkeepers work with numbers and financial data.
Working with an accountant or bookkeeper doesn’t mean losing control of your business. The best bookkeepers and accountants work with you, giving you visibility into your finances and helping you get a better understanding of your company. It’s important to note that some EAs only provide tax services and don’t handle other bookkeeping and accounting work. Bookkeepers sometimes do accounting tasks, such as net cash definition generating financial reports from the accounting software, making journal entries for depreciation and accrued expenses, and more. Sure, most small-business owners don’t start businesses because they’re accounting experts.
Flexible Work that Works: Revolutionizing Tax and Bookkeeping Careers with Intuit
Many experienced and knowledgeable bookkeepers honed their skills with on-the-job training. In this post, we’ll cover the differences and similarities between accountants and bookkeepers and their services so you know which to hire. In this guide, we’ll explain the functional differences between accounting and bookkeeping, as well as the differences between the roles of bookkeepers and accountants. Bookkeeping focuses on recording and organizing financial data, including tasks such as invoicing, billing, payroll and reconciling transactions. Accounting is the interpretation and presentation of that financial data, including aspects such as tax returns, auditing and analyzing performance.
Career Paths
If you are already a CPA, you can act as an enrolled agent without passing the exam. However, when it comes to more complex financial reporting and analysis, an accountant’s expertise is typically required. Still stumped about the difference between bookkeeping and accounting? Here, we go over the distinct functions of accounting and bookkeeping, highlighting the unique roles each can play within your business. Certification is not always mandatory but can enhance your resume and demonstrate expertise.