Bookkeeper vs Accountant

If you’re looking to outsource professional accounting services for your business, you might wonder what the difference between bookkeepers and accountants is. Although both professionals oversee an organization’s finances, each has their own distinct set of primary objectives, skills, and responsibilities.

What is a bookkeeper?

Bookkeeping refers to the practice of recording, processing, summarizing, and reporting an account’s financial transactions. A bookkeeper’s main goal is to track the money flowing in and out of the business.

Their day-to-day responsibilities include:

• •Recording the business’ financial transactions
• •Tracking debits and credits
• •Updating and maintaining the general ledger
• •Creating invoices
• •Managing payroll
• •Reconciling accounting entries
• •Ensuring compliance with local reporting requirements

What is an accountant?

What a bookkeeper records, the accountant analyzes. The accountant uses the financial data in bookkeeping records to provide actionable financial insights and advice.

Examples of day-to-day accounting tasks may include:

• •Verifying and analyzing financial data
• •Creating tax returns, income statements, and balance sheets
• •Performing business audits
• •Producing financial forecasts based on business trends and growth opportunities
• •Providing financial advice

Bookkeeper vs. accountant key differences

Here’s an overview of some bookkeeper vs accountant differences.

Then again, there are a few other key differences between bookkeepers and accountants aside from their responsibilities. Each profession requires a different set of qualifications and skills despite the overlap in purpose.

Required education

Most employers do not require bookkeepers to complete higher education. Meanwhile, all entry-level accounting positions require applicants to have a bachelor’s degree in accounting.

Accreditations

Bookkeepers are not required to obtain licenses to perform their duties. However, Canada-based bookkeepers who want concrete proof of their expertise have a few formal accreditations to consider.

• •Certified Professional Bookkeeper (CBP): CBP is a designation offered by CBP Canada, legally known as the Institute of Professional Bookkeepers of Canada (IPBC). Because CBP is a nationally recognized certifying body, its certification enhances passers’ professional image. The certification requires a letter of reference, three years of full-time bookkeeping or accounting experience within the past five years, and a passing score in CBP’s 100-item exam.
• •Registered Professional Bookkeeper (RBP): RBP is an accreditation offered by the Canadian Bookkeepers Association (CBA). It is available to CBA members with good standing.

Like bookkeepers, accountants are not required to complete any licensing exams. However, certain positions require accreditation from nationally recognized certifying bodies.

The most renowned accounting accreditations in Canada include:

• •Chartered Professional Accountant (CPA): A CPA license allows accountants to work as public accountants. Attaining CPA accreditation requires finishing six CPA professional education program modules, completing 30 months of accounting experience, and passing a final examination.
• •Chartered Financial Analyst (CFA): CFA accreditation qualifies accountants to work as financial advisors, investment bankers, and consultants. Accountants with CFA accreditation have passed three levels of CFA examinations and completed 48 months of accounting experience.
• •Certified Internal Auditor (CIA): Accountants with CIA accreditation are qualified to perform internal and external audits for organizations. The accreditation, which is offered by the Institute of Internal Auditors Canada, requires candidates to pass a four-part exam and complete work experience proportionate to their highest educational attainment.
• •Chartered Management Accountant (CMA): CMA is a leadership-focused accreditation that qualifies accountants to perform strategic management and financial accounting for large organizations or corporations. The accreditation, offered by the Institute of Management Accountants, requires applicants to pass the CMA exam and complete two years of continuous work experience in management accounting or financial management within seven years.

Required skills

Both professions require a keen attention to detail and a willingness to work with numbers. Useful soft skills include organization, communication, and critical thinking.

Bookkeeping is centered around record-keeping and data entry. However, since modern bookkeeping relies on automation, today’s bookkeepers need to be proficient in digital bookkeeping software, such as QuickBooks, Xero, and FreshBooks.

Familiarity with spreadsheets like Excel and Google Sheets is also a bonus.

Meanwhile, accountants need specialized industry knowledge. This includes

• •Understanding of how businesses operate
• •Ability to interpret financial data
• •Familiarity with local tax codes
• •Ability to forecast budgets
• •Producing financial reports

The role requires a high degree of logic and the ability to forecast results based on past patterns. Accountants also need to communicate their ideas in a way that businesses understand.

Relationship between bookkeeping and accounting in business

Bookkeepers maintain organized records of a business’s financial transactions, while accountants interpret the information bookkeepers prepare. To make an analogy, bookkeeping is to buy ingredients as accounting is to cooking a meal.

While the professions share a common end goal, they are separate due to the load their respective practices take. Bookkeepers typically have to work with thousands of organizational transactions.

Should bookkeeping be the responsibility of accountants, the manual load of record-keeping would take time and focus away from generating financial insights.

When to hire a bookkeeper

Smaller or newer organizations might not need bookkeeping services in the beginning. You can record transactions yourself if you have enough time and willingness to familiarize yourself with bookkeeping software or spreadsheets.

However, there are a few scenarios where hiring a bookkeeper is optimal:

You lack time

Keeping financial records organized, categorized, and up-to-date is a time-consuming process. Time spent on bookkeeping is time better spent on managing and growing your business. If you use the time you would’ve spent on record keeping on activities that increase your business’ profitability, you can offset the cost of hiring a bookkeeper.

You want to ensure accurate record-keeping

Bookkeepers’ specialized training helps them reduce record-keeping errors. Clean records then help your accountants do their jobs more efficiently. With good bookkeepers, you save time, effort, and resources.

You want to maximize tax benefits

Staying on top of tax rules can be confusing for laypeople. Bookkeepers can help you spot potential tax returns and reduce the amount you must pay in taxes.

When to hire an accountant

Accounting services are necessary for any serious business. They’re particularly useful in the following scenarios:

You need help managing finances

Accountants help you make more informed financial decisions. They can contrast the patterns in your financial data with their knowledge of real-world markets to help you predict the impact of major financial decisions. For example, they might help you understand the impact of buying a business, taking out a loan, hiring more employees, or purchasing new assets.

You are writing a business plan

Accountants can use their expertise to help you ideate informed financial strategies. If you pitch a business plan, they can study the market you plan to operate in, and create financial projections to help evaluate the concept’s feasibility.

You need to deal with government paperwork

Good accountants stay up-to-date with evolving legal and regulatory requirements and can help your business stay compliant. Accounting services are useful when you need to file business paperwork.

Examples of activities accountants can help with include:

• •Filing legal business documents
• •Preparing annual statements
• •Managing payroll and employee tax payments
• •Tax compliance

You are being audited

In the unlikely event that the government calls your business for an audit, it will help to hire an accountant. A professional can guide you through the process while ensuring that you comply with all relevant tax laws. They will help you identify the reasons your records are inconsistent, and provide advice for healthy record-keeping in the future.

Summary

Bookkeepers and accountants both play vital roles in ensuring a business’ financial health. Bookkeepers maintain accurate financial records that accountants interpret to provide useful financial advice.

Hire a bookkeeper if you need help with the day-to-day data entry required in recordkeeping. Bookkeepers save you time, help you maintain accurate records, and maximize tax benefits.

Meanwhile, accountants can help you with more complex financial needs. Call an accountant if you’re starting a business, making a major business decision, or submitting important government paperwork.

EpicBooks provides both bookkeeping and accounting services. Contact one of our seasoned professionals if you need assistance with small business accounting, bookkeeping, financial reporting, tax preparation, payroll management, budgeting and forecasting, or financial advisory.

Visit our service page for more information.