What’s The Difference Between A Bookkeeper And An Accountant?

Bookkeepers and accountants are vitally important to the success of any business. While some might think the definitions of bookkeeper vs accountant are very similar, they are in fact quite different.

The short answer to the question regarding what the difference is between the two is this:

Bookkeeper: Focuses on transactions; recording data in the right places so information and reports can be summarized correctly.

Accountant: Summarizes and analyzes data, then communicates that data and advises potential actions so business owners and executives can use it to make business decisions.

Definition: Bookkeeper vs. Accountant

Knowing the difference between the roles of bookkeeper vs accountant will help you utilize each professional for maximum benefit to your business.

The Role Of The Bookkeeper

Bookkeepers are hired to gather and record financial information for your company. They’ll be responsible for building a ledger or using accounting software to record financial information such as:

  • Purchases your company makes to run its business
  • Payroll data information/reconciliation/management
  • Sales of services and goods your company makes

The bookkeeper will also create invoices and record payments for your accounts receivable records. And they’ll manage and process payments your company makes to other businesses for goods and services the company has purchased.

The primary role of the bookkeeper is to ensure all financial information for your company is recorded properly so that reconciliation reports are accurate.

Related Article: Develop A Month-End Closing Checklist For Your Business

The Role Of The Accountant

Whereas the role of the bookkeeper is to record and reconcile financial data, the accountant takes that information one important step further.

While some accountants may be involved in recording data (depending on the size of the company and the definition of the position), the accountant’s main role is to reconcile, summarize, interpret, analyze and communicate that data to the right people.

As the accountant analyzes your company’s financial data (as recorded by the bookkeeper), they’ll work to help you create a financial system that ensures your business operates at maximum financial efficiency.

They’ll help you gain a clear picture of your company’s level of success from a financial perspective. From there, your accountant can recommend actions or steps that can help you navigate smart financial moves going forward.

An accountant can advise you, help you plan business growth from a financial level, and give you analytical data on how your company is doing financially as a whole.

And typically, you’ll want an accountant to be the person who gives that data analysis to you as the business owner, or your company’s controller or CFO. This is why having a trustworthy accounting team is so important. Learn about the Cloud Friday team here.

Related Article: 12 Common Bookkeeping Mistakes And How To Fix Them

Bookkeeper vs Accountant Summary

A bookkeeper records financial transactions, an accountant summarizes, interprets, analyzes, and communicates financial data. This is why both bookkeepers and accountants are considered a vital part of a successful business.

A bookkeeper cannot function as an accountant, however, an accountant can function as a bookkeeper. In other words, while your accountant may be willing to complete transactional operations such as recording data, it is unwise to expect your bookkeeper to analyze and advise you on that data.

Bookkeepers generate data, accountants turn data into information. Accountants have specialized education and training that makes them experts at turning your company’s financial data into information you can use to make wise business decisions going forward.

Bookkeepers manage data, process, record, and maintain financial information, accountants use that information to help with auditing, planning, and financial management. Accountants are educated to create an analysis of your company’s financial state. They can also help with taxes and auditing situations. These types of skills are typically beyond a bookkeeper’s expertise.

Related Article: 15 Valuable Small Business Tax Deductions

Knowing what you know now about the differences between a bookkeeper and an accountant, which one do you need to sufficiently run your business?

Do I Need A Bookkeeper Or An Accountant?

Now that you know the difference between a bookkeeper vs accountant, you might be wondering which of the two you need.

The answer to that question depends a lot on your individual business. Most businesses need both or an accountant that will perform bookkeeping duties. Ask yourself questions such as:

  • Who’s responsible for getting your company’s financial statements prepared?
  • Do you need someone to record your business’ financial transactions?
  • Who has the skills to help analyze and present your company’s financial picture?
  • Do you have an accountant to oversee your bookkeeper?
  • Do you need someone to act as a presenter of financial information to authorities?

If any of the above questions left you wondering, you almost certainly need an accountant. Most businesses do. And unless you’re adept and recording financial transactions properly on the software system you use, you’ll need a bookkeeper as well.

What To Look For In A Bookkeeper

As you work to hire a bookkeeper, there are several features you should keep your eye out for. Here are some suggestions.

Education And Experience

Education and experience are very important in the field of bookkeeping. Be sure any potential employees have taken a certified bookkeeping course and have experience working in bookkeeping.

If they’re fresh out of their classes, get references from instructors and ask lots of questions as to their adeptness, GPA, etc. It’s not necessarily bad to hire a bookkeeper with no experience, but it can be risky.

Software Knowledge

Your bookkeeper has to have a working knowledge of the type of accounting software your company uses. For example, if you use Quickbooks, be sure a potential hire for your bookkeeping position has worked with and knows Quickbooks.

I’d recommend they have at least three to six months of steady experience working in the program your company uses.

Reliability And Organization

A good bookkeeper has to be reliable and organized. Bookkeeping is a very detailed profession. There’s no room for unkemptness or chronic tardiness. Sloppiness in reliability and organization presents a risk that your books won’t be kept in a proper manner.

Good Communication Skills

Beyond simply recording debits and credits, a good bookkeeper will communicate with you regularly and clearly. They’ll share any potential problems they see as well as any recommendations they have to help maximize efficiency in your business.

What To Look For In An Accountant

As with a bookkeeper, having the right accountant is vital to your company’s success. Here are some features you should look for in an accountant.

Education And Experience

Just like with your bookkeeper, the accountant or accounting team you hire should have proper education credentials and sufficient experience. Find out where your potential accountant went to school and which certifications and degrees they have.

At the very least, they should have a degree in Accounting. Crossover accountants (people who have, for instance, a business degree which includes some accounting courses) might not have enough education and experience to do the job correctly.

Commitment To Continuing Education

Accounting rules and other accompanying rules, such as tax and business laws, change regularly. Work to hire an accountant who is committed to staying up to date on tax and business laws.

Interview them and ask what they do to keep up to date on changing laws.

Commitment To Your Best Interests

Another thing an accountant should have is a commitment to the best interests of your business. Beyond accounting, they should be proactive in searching for ways to save your company money and helping your business thrive.

If they’re not providing you with feedback on what you can do better, keep searching. Analysis, advisory services, and recommendations are part of an accountant’s job.

Here at Cloud Friday we offer business advisory services in addition to accounting. Learn more about that here.

Relevant Knowledge

Along these same lines, look for an accountant who has experience in your field of business. For instance, some accounting services like Cloud Friday work with several types of businesses.

For that reason, whether you’re in graphic design or consulting, they’ll be able to properly assist you in analyzing and advising you on business management and growth.

In addition, find out which software program your accountant uses. If they’re using a software program that differs from yours, ask them to detail how they can manage your books in a way that works given the different software programs.

References

A good accountant or accounting service will be able to easily supply you with a list of references. When you get the list, call the company owners or managers and ask them about the service they’ve received from the accountant you’re interviewing.

Summary

Both bookkeepers and accountants are vitally important to your business. While keeping bookkeepers on staff is common in business ownership, hiring accountant services is often preferred to keeping an accountant on staff.

Accounting services companies are typically much more affordable than hiring an accountant to work within your company. And a good accounting service will also perform your bookkeeping work to allow for them to have first-hand knowledge of your financial activity and ensure your business runs smoothly and profitably from a financial standpoint.

If you are looking for a high-quality bookkeeper or accountant check out our services.

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