Bookkeeper vs Accountant

The key difference between a bookkeeper and an accountant is that bookkeeper is responsible for performing the bookkeeping activities in the company where financial transactions are recorded systematically, whereas, Accountants are responsible for the accounting for the financial transactions that have occurred in the past by the company as well as reporting the financial affairs of the company which shows the clear financial position of the company.

A bookkeeper is a person without a college degree in accountancy responsible for the data entry tasks. Some of the tasks included are:

• Entering bills from Vendors
• Payment of bills
• Preparation of Sales invoice
• Mailing of statements to customers
• Processing payroll data

An accountant will hold a professional degree in accounting and continue the operations performed by the bookkeeper. Some examples are:

• Adjusting entries for recording expenses not yet entered by the bookkeeper (e.g., Interest on bank loans since the last bank payment, wages earned by employees to be processed the following week)
• Preparing company financial statements such as Income statement, Balance Sheet, and Cash flow statement.
• They further assist the management in understanding the financial impact of its past and future decisions.

Bookkeeping Sub Category:

1. Single-entry bookkeeping
2. Double-entry bookkeeping
3. Virtual bookkeeping

Accountants Sub Category:

1. Financial accounting
2. Management accounting
3. Cost accounting
4. HR accounting
5. Responsibility accounting

Let’s see the top 7 differences between Bookkeeper vs Accountant.

1. Bookkeepers must identify, quantify, record, and eventually classify financial transactions. In contrast, accountants must summarise, interpret, and communicate the latest financial transactions classified in the ledger account.
2. Financial decisions cannot be made exclusively based on bookkeeping records but can be considered based on accountant records.
3. Bookkeepers are not required to create financial statements, but accountants are responsible for preparing for the same.
4. The senior management generally does not get involved in the functioning of the bookkeepers. However, they would take an interest in the work of the Accountants as they require the information for making future management decisions.
5. The tools used by bookkeepers are Journals and Ledgers, and that of accountants are the balance sheet, income statement, cash flow statement, etc.
6. Bookkeepers do not require any special skills since most activities are mechanical. Still, accountants need specialized analytical skills due to the complexity involved in maintaining the books of accounts. It will require a professional degree in accounting and also some past work experience in the same.

Though, on many occasions, the terms bookkeeping and accounting are used interchangeably, their activities have their own set of differences, which we shall analyze. The activities of bookkeeping consist of:

• Preparation and sending of invoices to vendors and customers
• Recording of payments from the consumers
• Record, Processing, and payment of invoices from suppliers
• Recording and monitoring of inventory changes
• Processing payroll and petty-cash transactions
• Categorizing of credit card and other related expenses
• Monitoring of late payment and accordingly sending reminders to the impacted parties

The accountants require a higher level and specialized tasks that generally require the services of a CPA (Certified Public Accountant) or multiple Non-certified accountants with oversight of a CPA. Some of the functions undertaken involve:

• Creation and management of the Chart of Accounts (COA)
• Designing and maintaining financial statements
• Record of accrued revenue and deferred revenues and expenses
• Creating a budget and making comparisons against Actual expenses incurred
• Determining estimated taxes and preparing tax documents accordingly
• Keeping on issues relating to Financial and Tax compliance and take action accordingly
• Identification of potential tax write-off or other profit-maximizing opportunities.

The hiring of an individual to conduct these activities could have conflicting views. Often, small businesses may have the bookkeeping tasks completed in an unprofessional manner, forcing the CPA to spend more time catching up with these activities before progressing ahead. It is also preferred to have in-house bookkeepers who are professionally trained, giving the comfort level to the accountants.

For reducing costs and maximizing effectiveness, the firm must make sure they are using the same standardized methods and best practices. They should also be encouraged to communicate regularly and clearly. Finally, they should be made to work as a team instead of creating any barriers.

Ensuring the financial records are correctly organized, and finances are balanced by the bookkeeper coupled with smart financial strategy and timely tax filing of the accountant directly contributes to the long-term success of every business.

Certain business owners manage their finances on their own. In contrast, others may opt to hire a professional to focus on sections of the business they are interested in. Either of the options will help their business to grow. Additionally, with the advent of technology, multiple softwares are getting updated for executing the tasks automatically. This aspect will change the definition and requirements with passing time, and hence one must be updated with the same.

This has been a guide to bookkeeper vs accountant. Here we discuss the top differences between bookkeepers and accountants with infographics and a comparison table. You may also have a look at the following articles for gaining further knowledge in Basic Accounting –

• Excel Bookkeeping
• Control Account
• Examples of Bookkeeping
• Consignment Accounting Example