Aug 21, 2020

What’s the Difference Between an Accountant and a Bookkeeper?

Managing the financial side of your small business is critical to your company’s success, even if finances aren’t your forte. Bookkeeping and accounting are a part of every business’s operations, regardless of whether there’s someone specifically on the payroll to take care of these tasks. There are clear bottom-line benefits to knowing why each of these skills is important and how to best implement them into your business.  

What Is a Bookkeeper?

Bookkeeping is a skill that has been around essentially since the first businesses opened their doors—many of the earliest written documents in human history are ledgers and accounts.

Basically, bookkeeping is the practice of recording all of a business’s revenue and expenses. A bookkeeper aims to balance a business’s ledger by recording purchases, sales, and invoices. Many small business owners become their own bookkeepers, especially in their early days. While physical ledgers are often utilized, bookkeeping software has become prevalent.

A bookkeeper can be a designated employee or contract service. Importantly, a person doesn’t need to be certified to be a bookkeeper, but the job definitely requires skill.    

What Is an Accountant?

An accountant takes the financial data recorded in your books and goes a few steps further. An accountant can help you to understand why your cash inflows and outflows are the way they are. They also should be able to help you plan your business’s financial future, especially in various macroeconomic conditions.

While a software program can cover many of your bookkeeping tasks, accounting requires more experience and predictive abilities. Generally, accountants receive education in the field, as well as certification. An accountant is also a valuable person to work with if you face any issues from the Internal Revenue Service.

How Are They Different?

While an accountant can do your bookkeeping, the opposite is not typically true, due to certification requirements.

In a broad sense, accountants look at the big picture of your business’s financial health, while a bookkeeper focuses on its data points. You can trust a qualified accountant’s input on how you can reasonably expand your company or prepare for economic headwinds, like a recession. A bookkeeper, on the other hand, is solely charged with keeping records.

In fact, an accountant usually defines how a bookkeeper works by making decisions about how costs should be categorized and what specific data to track.

Costs to Consider

All companies, no matter the size, do some sort of bookkeeping and accounting—the difference for your success lies in how accurate and organized these parts of your business become. If you are a new sole proprietor, you are probably doing both accounting and bookkeeping jobs at once, along with operating your business.

Automating elements of your bookkeeping using software like Sunrise can ease this burden significantly, whether you have a dedicated bookkeeper or you’re doing it yourself.

Even though it’s a greater expense, hiring an accountant as your business grows is a smart move, even if you only consult them occasionally. 

 

About the author

Barry Eitel
Barry Eitel
Barry Eitel has written about business and technology for eight years, including working as a staff writer for Intuit's Small Business Center and as the Business Editor for the Piedmont Post, a weekly newspaper covering the city of Piedmont, California.

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