The Difference Between Bookkeepers and Accountants

Bookkeepers are often involved in a business's day-to-day operations, while accountants take a higher-level view.

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Bookkeepers and accountants share the same long-term goal of helping your business financially thrive, but their roles are distinct. Bookkeepers focus more on daily responsibilities, like recording transactions, while accountants provide overarching financial advice and tax guidance.

Bookkeeper vs. accountant comparison

Bookkeeper

Accountant

  • Prepares important monthly financial statements.

  • Communicates with small-business owners on a regular basis.

  • Maintains the chart of accounts.

  • Records transactions in the general ledger.

  • Handles accounts receivable and payable.

  • Reconciles bank statements each month.

  • Some manage payroll.

  • Prepares and files tax returns.

  • May communicate with small-business owners less often and usually during tax season.

  • Analyzes financial information from the bookkeeper.

  • Advises small-business owners on finances, compliance and taxes.

  • Helps apply for business loans.

What does a bookkeeper do?

Responsibilities

Small-business bookkeeping revolves around keeping accurate records of all financial activity. To do this, bookkeepers should be involved in a business’s daily operations. Some of their tasks include the following:

  • 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

If you’d like to hire an expert bookkeeper, look for candidates with certifications from either the National Association of Certified Public Bookkeepers or the American Institute of Professional Bookkeepers. They’ll have CPB or CB after their names. However, these certifications are optional; people don’t need one to be a professional bookkeeper.

Resources

What does an accountant do?

Responsibilities

While a bookkeeper’s job is very detail-driven, accountants generally adopt a broader perspective. Here are some of their tasks:

  • 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

If you want someone with a higher level of mastery in accounting, consider hiring a certified public accountant. CPAs are accountants who have completed a higher level of education and have passed the CPA exam. CPAs also need to keep their certification current, so they’re often up to date on important tax law changes.

However, people don’t need CPA licensing to be an accountant. Some accountants have a bachelor’s degree in accounting but no CPA certification.

Resources

Do you need both a bookkeeper and an accountant?

All small-business owners should consider hiring a professional accountant to handle their tax returns, at the least. When it comes to bookkeeping, some business owners choose to manage those tasks themselves. You may not mind balancing the books and handling financial transactions, and software like QuickBooks Online, FreshBooks and Xero can automate a significant amount of this work. But as your business expands, bringing on a bookkeeper can alleviate your workload and free up your time to devote to other areas of the business.

A bookkeeper can be the business owner, an in-house employee, freelancer or professional from an online bookkeeping service like QuickBooks Live or Bench. Accountants are often hired externally, based on referrals.