American businesses of all sizes have a number of financial information that must be organized and reported to comply with legal obligations, such as tax requirements. Various professions revolve around the recording, reporting, organization, and analysis of this financial information, including accounting and bookkeeping. However, in order to know the main differences between accounting and bookkeeping, you need to learn what it means to be a bookkeeper and how this job compares to the career of an accountant.
What is Accounting?
Potential candidates may wonder what accounting is and what are the responsibilities of an accountant. Although it may sound similar to bookkeeping, accounting is much more advanced. Accounting is a scientific discipline dedicated to the management of the financial information of individuals or companies. Through their training, professional accountants learn to analyze financial statements in order to find opportunities for organizations to improve their financial situation.
The responsibilities of an accountant may include evaluating past spending habits to optimize a budget or advising the leaders of an organization on how to make a more profitable investment. Accountants may also be hired to investigate fraud in certain organizations for forensic purposes.
The most successful accountants tend to be highly skilled. In fact, there is a prerequisite for completing at least 150 hours of higher education before a professional can become a Chartered Accountant (CPA). This level of education is higher than what is normally required for a bachelor's degree. Therefore, obtaining a master's degree in accounting may make more sense for accountants who wish to accelerate their professional advancement.
What is bookkeeping?
It can be difficult to distinguish what bookkeeping is and how it differs from accounting because bookkeeping is an important part of accounting processes. The main difference between the two professions is that bookkeepers usually only focus on the process of recording, archiving, and retrieving data about an organization's financial transactions.
Accountants are qualified to provide the same services to their employers, but they can influence business by providing more in-depth and practical advice on their finances. Simply put, a bookkeeper can perform some of the same tasks as an accountant, but a bookkeeper would not be qualified to take on all the responsibilities of an accountant job. When comparing bookkeeping and accounting, it is important to note that accountants have multiple responsibilities.
The difference between bookkeeping and accounting
Bookkeepers can help accountants prepare the right documents and implement the best systems so they have everything they need to be successful.
To be a bookkeeper, apart from being a lover of numbers and Excel spreadsheets, you must have two years of relevant experience with an accountant.
To be an accountant, someone usually has a college degree and is good at reconciling accounts, preparing financial statements, and filing income tax returns.
Let's take a closer look:
Accountants: Accountants hold a bachelor's degree in accounting or a bachelor's degree in finance, which is considered a suitable surrogate and interprets, classifies, analyzes, reports, and summarizes financial data.
Bookkeepers: Bookkeepers have two to four years of experience or an associate's degree. Their work is supervised by an accountant or a small business owner whose books they prepare. They record financial transactions, which set the stage for accountants.
It gets a little easier, doesn't it?
Now let's demystify each one and determine which one is best for your business.
What does a bookkeeper do?
A bookkeeper can be a vital part of a business. This person allows everyone to focus specifically on their tasks to support growth, ensuring that nothing is lost financially.
In a small business, a bookkeeper is beneficial because he or she can help a small business owner control expenses or prepare invoices.
So what exactly do bookkeepers do?
1099 Preparation
Credit/debit card reconciliation
Custom reports
Data logging and recording (encoding)
Maintain and manage the chart of accounts
Pay customer bills every week.
Payment slips, including working with a verified supplier to set up your business payroll account, schedules, and payroll processing
Provide clients with weekly and monthly reports.
Reconciliation of bank statements
What does an accountant do?
An accountant manages all the financial aspects of the business that can sometimes make your head spin.
They keep track of everyone and sometimes even help you find ways to scale. For a small business owner, it often helps to hire an accountant.
This way, they too can focus on what keeps their business running smoothly, rather than drowning from one form to another.
What do accountants do?
Advice on pension funds
Audit
Business creation advice
Company reports and compliance
Complete the income tax return
Financial analysis and strategy
Financial forecast
Financial management advice
Prepare and adjust the entries
Prepare financial statements
Tax strategy, advice, and tax planning
And an accountant can also do everything a bookkeeper can do, although what they would be willing to do is up to the accountant.
Final Words
Accounting and bookkeeping are two distinct functions despite overlapping roles and responsibilities. We hope our article has helped clarify the similarities and differences.
Now that you understand the differences, it's time to decide on the next steps: should you manage your finances or delegate the work to a finance professional?
This decision is personal and depends on the needs and goals of your business.
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