The Difference Between Bookkeepers and Accountants

Many, or all, of the products featured on this page are from our advertising partners who compensate us when you take certain actions on our website or click to take an action on their website. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.
Bookkeeper vs. accountant comparison
Bookkeeper | Accountant |
---|---|
|
|
What does a bookkeeper do?
Responsibilities
- Recording transactions: Every time money moves into or out of your company, a transaction should be recorded in the general ledger, a master document that shows credits, debits and balances for each financial account. That transaction could be a sale, purchase or bill, among other things.
- Maintaining the chart of accounts: Bookkeepers set up a company’s chart of accounts and make sure there aren’t too many or too few accounts. If the chart of accounts is set up incorrectly, small mistakes can snowball into larger issues down the road.
- Reconciling bank statements: This task usually happens on a monthly basis and ensures that recorded transactions match what’s in that month’s bank statement.
- Preparing important financial reports: These include the profit and loss statement, balance sheet and statement of cash flows.
- Handling accounts receivable and accounts payable: Managing accounts receivable could mean sending out invoices, establishing terms of payment, ensuring customers pay on time and tracking down overdue payments. Handling accounts payable entails making sure vendors get paid.
- Managing payroll: Bookkeepers may read time sheets, calculate deductions and process payroll.
Qualifications
Resources
What does an accountant do?
Responsibilities
- Preparing and filing tax returns: Accountants play a big role during tax season. Their expertise helps minimize your tax liability, or how much you pay in business taxes, and ensures everything is filed correctly. Working with one lessens your chances of getting audited by the Internal Revenue Service for a tax-filing error.
- Giving financial planning advice: Accountants can help you choose the best business structure in the early stages of your business and often act as trusted advisors going forward. It might even be worth getting them involved before you’ve finished writing your business plan so they can provide financial forecasts and financial planning tips.
- Helping you apply for business loans: Since accountants have a handle on your company’s overarching finances, having one comes in handy if a lender asks you complicated questions about your business’s performance. They may also be able to advise you regarding the interest rates, terms and conditions of any small-business loan offer you receive.
Qualifications
Resources
Do you need both a bookkeeper and an accountant?
Article sources
Best Accounting Software for Small Businesses