For a lot of people, the job function of bookkeeping vs accounting is exactly the same. The truth is that bookkeepers and accountants are similar, but their jobs are quite different.
Understanding the five key differences can ensure your financial operations run smoothly without any problems.
1. Bookkeeping vs Accounting Roles
Both positions of bookkeeper and accountant handle the transactions and flow of money through a business. Their roles revolve around financial operations but their specific duties differ.
Here are some of the duties of a bookkeeper:
- Complete payroll
- Create invoices
- Record financial transactions
- Balance general ledgers
- Post credits and debits
The general ledger will be the main focus of any bookkeeper’s job. A general ledger is where the bookkeeper will record sales and expenses. It’s important to stay up-to-date with postings before closing a month.
All sales and expenses must have documentation to support the transaction. Failing to do this can result in an audit by the IRS.
An accountant has duties that relate to the bookkeeper but are different in scope. Here are some of the responsibilities:
- Analyze operational costs
- Financial statements
- Income tax returns
- Adjusted journal entries
- Analysis and forecasting
The accountant generally takes a “big picture” approach to operations. Their role is to help an owner understand the financial impact of decisions.
2. Credentials Needed
The credentials needed by bookkeepers and accountants largely depends on the business and years of experience a person has.
A bookkeeper may only be required to have a high school diploma with a few years of experience while accountants are required to have a bachelor’s degree in accounting.
Some higher-profile positions require bookkeepers to have a bachelor’s degree or several years as a bookkeeper. Likewise, some companies need their accountants to be a certified public accountant (CPA).
Whether your business is in need of a bookkeeper or accountant, a clean criminal background with no offenses pertaining to financial crimes is a necessity. Protect yourself and your business by hiring people who aren’t likely to try and steal.
The objectives of your financial staff will differ based on their roles.
A bookkeeper’s goal is to record all financial transactions chronologically. There are a few rare instances where the order is not based on chronology. They should be able to pick out a transaction with ease.
An accountant should be able to know the financial status of a company, the short term future, and which decisions will help a company accomplish this. Accountants should be able to inform business owners of the company’s financial health at any time.
While the objectives are slightly different, a competent accountant will be able to perform or understand all functions of a bookkeeper. A bookkeeper won’t always be able to understand the scope of the work of an accountant.
The Difference Is in the Details
While it might seem like accountants and bookkeepers are the same position, they’re actually quite different when you look at the details.
Knowing whether you need bookkeeping vs accounting will help your business operations run smoothly.
If you want to make sure the professionals are taking care of your financials, please contact us today.