The Difference Between Bookkeepers and Accountants
Simply put, bookkeepers are responsible for the recording of financial transactions whereas accountants are responsible for classifying, analyzing, interpreting, reporting, and summarizing this financial data.
The initial classifications and recording of a company's transactions like bills paid, daily sales and payroll or another expenditure fall to a bookkeeper. There is, however, no line in the accounting processes where a bookkeeper’s role should end and that of the accountant to begin. Accounting processes may call for an accountant to correlate and indemnify the books or records presented by a bookkeeper.
On the other hand, an accountant reviews the bookkeeper’s financial records and statements to facilitate analytical interpretations. The accountant has a four-year degree in accounting, which enables him or her to analyze and interpret the bookkeeping data; reflecting a company's financial health. Without focusing all that much on the overall financial analytics, a bookkeeper maintains an as accurate a record as possible.
Job Descriptions of Bookkeepers vs. Accountants
Duties of a Bookkeeper
The initial processes involved in any accounting process are usually the vestige of a bookkeeper. Transaction recording lays a foundation for the final accountancy processes, and an accountant can handle this as well. Therefore between bookkeepers vs. accountants, the limitations of the bookkeeper's skills analysis and interpretation of financial data are the main difference in professions.
A bookkeeper can record all transactions of financial nature for a company daily. Accounting software has, however, automated most of these chronicle processes, and bookkeepers can summarize and classify financial report data. Such bookkeepers are known as full-charge bookkeepers and may demand higher pay than regular bookkeepers but not more than accredited accountants.
Job Description of an Accountant
An accountant follows standard, principles, and requirements set out in accounting for the analysis and interpretation of the recorded financial data. To report the financial performance and conditions for a company, the accountant takes on tasks such as;
- Analysis of financial transactions
- Summary of statements and business records
- Interpretation of financial data
- Classification of review information
- Summarization of economic performance and
- Reporting company financial conditions
Others in the accounting profession include tax accountants and Certified Public Accountants.
Similarities between a Bookkeeper and an Accountant
To a layperson, bookkeeping and accounting may appear as very similar professions without many differences. In both instances, basic accounting is necessary knowledge to venture into either bookkeeping or accounting. Some small and medium enterprises may even only hire bookkeepers who can handle accounting processes.
Such bookkeepers undertake assignments that will include generating financial reports and transaction classifying processes, a preserve for accountants. The company may also only require the services of just an accountant, especially where accounting software has memorized transactions and automated the reports. Such an accountant will have to make bookkeepers classifications and transaction recording processes to begin the accounting procedures.
Other Distinctions between Bookkeeping and Accounting
The qualifications required to handle comprehensive accounting processes make an accountant a sort of supervisor for bookkeepers. An accountant may become a consultant to company bookkeepers who ensure financial process accuracy by seeking his or her review and advice. A certified public accountant is the higher expert in the field of accounting, for which the bookkeeper needs only a basic understanding and certification.
The Certified Public Accountant has a more in-depth insight into the accounting aspects of a company and can offer feasible business advice. A Certified Public Accountant gives ideas and advice that may call for the modifications of the books to align with cost practical deduction eligibility scenarios.
The tax accountant has a specialization in the field of taxation and the regulations that come with business mergers, for instance. These accountants may also offer advice on tax structures or investments that minimize tax bills.
Rules and Expectations for Bookkeepers vs. Accountants Roles
Other than the level of expertise, there are rules and regulations that determine what a bookkeeper or an accountant can do. Though the difference in areas of expertise sometimes overlap and it's up to the entrepreneur to tell when they need the services of either. It's not cost-effective to hire an expensive accountant to handle what a bookkeeper can comfortably do at a much less price.
A bookkeeper is also limited by licensing which a Certified Public Accountant has for the issuing of audited statements. Companies need these commissioned documents to fulfill regulation for permits and licenses or when dealing with other financial institutions such as banks.
When to Hire Either a Bookkeeper vs. Accountant?
For specific industries and financial acumen of some small, medium, or large entrepreneurs, retaining the services of a bookkeeper and an accountant is essential. While daily transactions are better looked over by a bookkeeper, the accountant is vital to a company’s decision making with periodic financial reviews.
Knowing when the professional understanding of either a bookkeeper or an accountant is needed, either separately or together will depend on factors such as;
- The type of commerce the company is involved in
- The size of the company’s inventory
- The size of that company’s staff
- The variety of services the company offers
- Level of expertise that the company operates under
- Whether or not the company needs financial support
Entrepreneur or business owner must have access to the aid of financial service providers such as accountants and bookkeepers during their early growth stages. The proper decisions and plans are made when all the information is available, which is ultimately cost and time-efficient. A small or medium enterprise need not spend time poring over financial statements when they can be focusing on the business.
Retaining a bookkeeper alone isn’t sufficient for your enterprise despite their training or authority. A bookkeeper may not be aware of tax documents that require to be filed within deadlines which will incur penalties from revenue authorities. Knowing what a business needs is essential when deciding to hire a bookkeeper vs. accountant.
The bottom line may also come down to the available money for expenditure. Some small entrepreneurs do their bookkeeping and will only require an accountant when tax accounting or intricate financial processes require the expertise of a tax accountant or CPA.
Outsource Your Company’s Financial Services to Bookkeepers and Accountants
The business world is fast-changing, while regulations that keep enterprises afloat such as licensing and taxation require exceptional financial accounting services. Transparent and trustworthy financial statements are mandatory for most dealings that involve partners or financing institutions. The best business manager is one who discerns the accounting needs of the company to decide whether or when to hire a bookkeeper vs. accountant.
Posted: 23 Jul, 2019