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When most people picture the financial field, they might not be able to describe the difference between a bookkeeper and an accountant. While both professionals share common goals, they help organizations throughout different areas of the finance cycle. Understanding the difference between the two not only empowers business owners, but it’s also vital to know the credentials that bookkeepers and accountants have in order to determine when or how to use each.
The Bookkeeper
In most positions, bookkeepers must have either an associate’s degree or two to four years of experience in the field. In order to properly do their jobs, bookkeepers must understand important areas of finance and be sticklers for accuracy. Usually, the owner whose books they are doing or an accountant will oversee the bookkeeper’s work. Bookkeepers may also be eligible to obtain certification through a professional organization such as the American Institute of Professional Bookkeepers (AIPB).
The Accountant
In order to be able to call themselves “accountants,” these professionals must have earned a minimum of a bachelor’s degree in accounting. Individuals without a specific accounting degree can earn a bachelor’s in finance. Accountants are eligible to apply for certain finance certifications within the field that can open up additional career opportunities. For instance, accountants with enough secondary education and experience may become Certified Public Accountants (CPAs), one of the most recognized designations in the industry. To become a CPA, an accountant must show evidence of experience as an accountant and pass the Uniformed Certified Public Accountant exam.
Certification
A certified or experienced bookkeeper may eventually move into an accounting position while keeping in mind the rules and terminology on what a bookkeeper can do are dictated by each state’s accounting board. By the same token, an accountant may also focus on advice, reporting and business processes and analysis. In many cases, bookkeepers and accountants work together, with the bookkeeper acting as a go-between who promotes a stronger relationship between the accountant and the business owner.
Daily Tasks
Some tasks regularly undertaken by a bookkeeper include preparing reconciliation reports and reconciling accounts, preparing initial financial statements, maintaining and processing the owner’s payroll system and processing payments, receipts, invoices and other financial transactions. Accountants may include some of these tasks, but another difference between a bookkeeper and an accountant is that the latter is in a better position to offer financial advice and projections of the company’s financial future by analyzing past performance. Other services include corporate reporting and compliance, auditing, business establishment assistance and taxation advice and planning.
Properly balanced finances and organized financial records produced by the accountant combined with accurate tax filing and smart financial strategies offered by the accountant directly contribute to the long-term success of the company. While some small business owners decide to teach themselves how to effectively manage their finances, others choose to hire a professional, freeing up their time to focus on the parts of their company they love the most. If you’re the latter and looking to hire someone to help you run your company, it’s important that you first understand the difference between a bookkeeper and an accountant before choosing the professional that’s right for your business and goals.