People often think that accountants and bookkeepers do the same job. After all, both deals with the financial transactions and activities of business. They organize financial records and helps in balancing a company’s finances. Both of these occupations are crucial to the success of business. So, what are the real differences between these two professions? Although they both perform financial work, the work varies quite substantially between the two.
A bookkeeper plays a key role in the business environment, so much so that every business require one. If you think about the accounting process as a whole, there are several aspects where bookkeepers are involved. These aspects of the process include: recording, classifying, interpreting, analyzing, reporting and summarizing. Out of these aspects, the bookkeeper is solely responsible for recording.
The primary role of a bookkeeper is to keep records of daily transactions of business. Job duties and responsibilities of a bookkeeper include maintaining and balancing financial ledgers along with entering debits and credits. This also involves recording financial transactions, creating invoices and preparing financial statements, handling payroll, tax returns and internal reports for accountants.
A bookkeeper handles the ledger in a business environment. A ledger contains sales and expenses of business. The bookkeeper makes entries of these transactions on a daily basis and also balances the ledger. The bookkeeper also safeguards the accuracy and completeness of the book of accounts. The bookkeeper also assists accountants in preparing financial statements and also provide supporting documents related to recorded business transactions.
While the bookkeeper focuses only on the recording process, with the availability of best accounting software, it allows bookkeepers to perform certain accounting tasks like creating financial statements. A bookkeeper must have experience of two to four years or possess an associate’s degree. Successful bookkeepers also strive for having knowledge of financial topics and accuracy.
An accountant holds a bachelor’s degree in accounting. He/she may have the title of Certified Public Accountant (CPA). An accountant deals with a broader financial area than a bookkeeper does. The accountant also designs the bookkeeping system, creates controls which ensure that the bookkeeping system works well and analyzes and verifies data.
An accountant may also prepare financial statements, create adjusting entries, complete income tax returns, analyze the costs of business operations and also helps the business owner to understand financial decisions. This way, an accountant makes sense out of recorded financial information and also produces financial models from this data.
The role of an accountant in business is very crucial. The accounting process provides detailed financial records and reports that give the owner of the business a better understanding of profitability and cash flow. The accountant also takes the ledger information and creates a much bigger picture of the financial state and situation of the business.
For a successful business, it should have people in both roles of accountant and bookkeeper as their occupations go hand-in-hand. They both work as a team since the bookkeeper properly balances finances and also organizes financial records, it helps the accountant complete the accounting process. With this, an accountant can help the business owner to make major finance related decisions as well as forecast future profitability and growth.
Does this article clear any doubt you have between an accountant and a bookkeeper? Let us know about your views and suggestions by mentioning them in the comments section.