How does a Bookkeeper differ from an Accountant?
The difference between a bookkeeper and an accountant is not necessarily commonly known information.
Even though both professions have similar objectives, they provide different services in the overall accounting procedure. It is essential, for business owners especially, to understand the role each fills.
This article will go over the following information:
- Comparing and contrasting the two jobs
- Helping you to understand when to hire a bookkeeper and when an accountant is required
- Going over when it’s the best time to seek financial assistance for your business
Let’s begin with defining each role’s responsibilities.
An accountant keeps, inspects, and examines a company’s financial data. An accountant focuses more on the big picture. These responsibilities are most commonly completed by a certified professional accountant (CPA).
A bookkeeper is responsible for keeping all financial records up-to-date and accurate, this includes even daily transactions. These records are kept in a database. There is no licensing required to become a bookkeeper, but there are certifications available to complete. The required qualifications for bookkeepers are primarily left up to their potential employers.
How does bookkeeping merge with accounting?
These two roles often end up intersecting as they are both components in the process of accounting.
A bookkeeper is the first set of eyes on your finances. They document and categorize your transactions, including sales and the money used to pay bills and employees.
The main responsibility a bookkeeper has is to be sure all records are correct and complete. They do not translate or examine the data.
A bookkeeper takes the records they compiled and sends them off to the accountant. An accountant takes this information and looks at the bigger picture. Accountants usually take the following steps:
- Go over all records sent by the bookkeeper
- Examine and translate the records
- Create a report based on the information
- Give advice about the report they created
The accountant’s job depends on the records prepared by the bookkeeper. This information gives the accountant a picture of the overall health of the business and allows them to see exactly where things are going right/wrong. Each role is vital in the accounting process.
Does everyone need a bookkeeper?
This is an important question to ask yourself. Whether your business needs a bookkeeper or an accountant depends on the industry you are in, and the knowledge required to handle your financial data.
A bookkeeper will cost less than an accountant and help keep track of your daily transactions, but they will not always have the knowledge required for your needs. If you need the data to be looked over more in depth, an accountant may be your best choice.
When is the best time to look for help with your finances?
As you may have heard from your fellow business owners, it is never too early to look into accounting professionals. Having a financial professional from the beginning stages of growing a business is a decision very few regret.
You can get help with making a financial plan from an accountant, which can help save you time and money. Your books will always be up to date and accurate with the help of a bookkeeper, saving you time and perhaps frustration. You can focus on your business, while your finances are taken care of by professionals.
Hiring an accountant or a bookkeeper is a decision you will have to make based on what you feel is best for your business. Always remember you can change your mind and hire one or the other whenever the need arises.