Accountant vs Bookkeeper: What’s the Difference?

As a small business owner, one of the most important decisions you’ll make is choosing between an accountant and bookkeeper to handle your finances. Though the titles may seem interchangeable, accountants and bookkeepers play very distinct roles.

In this article, we’ll clearly outline the key differences between their responsibilities, qualifications, and certifications. You’ll learn when your small business needs each professional, why hiring both can benefit your company, and how their services complement each other. With the right understanding of accounting vs. bookkeeping, you can optimize your business’ financial management.

Key Responsibilities of an Accountant

Accountants are highly trained finance professionals who provide the following strategic services:

• Prepare essential financial statements including profit/loss, balance sheets, cash flow statements
• Complete business tax returns, sales tax filings, and payroll tax filings
• Perform audits in accordance with accounting standards
• Provide advisory services on accounting best practices, projected expenses, growth planning, and tax optimization
• Help setup or improve accounting systems, controls, and procedures
• Analyze financial reports and trends for actionable business insights

In summary, accountants focus on big-picture activities like financial reporting, tax compliance, advising on long-term strategy, and ensuring legal compliance.

Key Responsibilities of a Bookkeeper

Bookkeepers handle the day-to-day recording of financial transactions, including:

• Entering sales, purchases, receipts, payments into accounting software
• Performing bank reconciliations, accounts receivable, accounts payable
• Tracking fixed assets, inventory, and expenditures
• Preparing and making payroll payments including tax payments
• Issuing customer invoices and paying vendor bills
• Providing profit and loss statements monthly

Bookkeepers maintain the crucial source data that accountants then analyze and interpret. They focus on routine clerical tasks to organize finances on a granular level.

Key Differences Between Accountants and Bookkeepers

Roles and Responsibilities

Accountants handle advanced, analytical functions while bookkeepers focus on routine data entry and organization.

Education and Qualifications

Most accountants have at least a bachelor’s degree in accounting or finance fields. Bookkeepers may complete some college accounting courses or undergo specialized bookkeeping training programs.

Certifications

Accountants pursue certifications like Certified Public Accountant (CPA), Chartered Financial Analyst (CFA), Certified Management Accountant (CMA), and Certified Internal Auditor (CIA). Bookkeepers can obtain voluntary certifications like Certified Bookkeeper (CB) through the American Institute of Professional Bookkeepers.

Focus

Accountants concentrate on big picture strategy, legal compliance, financial reporting, and advising on taxes and growth. Bookkeepers track day-to-day transactions, receipts, expenditures and produce monthly reports.

Software

While accountants may analyze output and reports, bookkeepers regularly use accounting software like QuickBooks Online and Xero to record details.

	Accountant	Bookkeeper
Role	Strategic financial planning and analysis	Daily recording of financial transactions
Focus	Big picture view of finances	Granular details of finances
Duties	Prepare financial statements and tax returns, conduct audits, provide advisory services	Record income, expenses, payroll, bank reconciliations, invoices
Education	Bachelor’s degree or higher in accounting or finance	Some college accounting courses or bookkeeping certificate
Certifications	CPA, CFA, CMA, CIA	CB (Certified Bookkeeper)
Software Skills	May analyze output of accounting software	Enter data into accounting software like QuickBooks or Xero
Best for	Compliance, reporting, planning, taxes	Daily tracking and organization of finances

When Should You Hire Each?

Most small businesses need both accountants and bookkeepers as they grow. Consider hiring an accountant for long-term planning, taxes, audits, and advising. Bookkeepers can provide crucial daily organization of finances. As your company expands, your accounting needs will too.

Building Your Accounting Team

As a small business owner, you now understand the crucial differences between accountants and bookkeepers. But when and why should you hire each?

Consider hiring an accountant if:

• You need help preparing essential financial statements and tax returns
• You want an expert to perform audits and ensure legal compliance
• Your business requires advisory services on taxes, expenses, planning
• You lack accounting controls and need systems established

Consider hiring a bookkeeper if:

• You need daily bookkeeping and data entry for transactions
• You want help tracking expenses, inventory, payroll, invoices
• You need monthly profit and loss statements compiled
• You don’t have time for routine financial organization

Many growing businesses need both professionals on their accounting “dream team.” As your needs expand, first focus on bookkeeping to organize daily finances. Then bring on an accountant for higher level planning and compliance.

With the right understanding of their different roles, you can leverage both bookkeepers and accountants to master your company finances. The result is optimal growth and less tax burden. Isn’t that what every savvy small business owner dreams of?