What's the difference between a bookkeeper and an accountant?
When you're starting or running a business, a lot of new terms will come to your attention. A pair of these are bookkeeper and accountant. For most people working outside of the accounting and finance fields, these terms are often used interchangeably, but are actually significantly different in terms of tasks and responsibilities. Here's a quick look at the difference between the two and how to know which one you need for your business.
Generally speaking, a bookkeeper is an individual who enters financial data and an accountant is an individual who knows how to apply that information to create adjusting entries and financial statements. But it's a little more complicated than just that.
A bookkeeper often doesn't have a college degree in accounting or finance, and is the individual or individuals who enter your company's expenses and income into the accounting system. This used to literally mean entering this information into paper ledgers, or books, hence the moniker bookkeeper. But that's usually about where their tasks and responsibilities end.
An accountant typically has a minimum of a bachelor's degree if not a master's degree in a related field. For this reason, many small businesses will have a separate bookkeeper enter transaction data and the accountant handles more advanced tasks. These duties are split to provide a better distribution of work for both parties. When adjusting entries need to be made into an account, such as depreciation, those entries are created by an accountant who understands how these entries work and what impact it will have on the company's financial records, which they also prepare. They'll also spend time with management to explain changes in the company's financial status.
A Certified Public Accountant, or CPA, has studied for and passed an exam and has been licensed by the state. To retain that license, the CPA must meet particular continuing education requirements, ensuring their knowledge of issues in the field is up to date.
By knowing the difference between a bookkeeper and an accountant, you can quickly determine what tasks can be handled by which professional. If you need help figuring out what kind of accounting professional you need for your company, please feel free to contact us today. At AccountRely, you're more than a client - you're family.