They prepare all reports necessary to file taxes in a timely manner. With many accounting automation solutions available on the market, bookkeepers have been freed from the manual tasks of data entry. Nowadays bookkeepers can use the opportunity to give more insight and sometimes play the role of an advisor. Accountants analyze information prepared by bookkeepers to create statements, financial metrics, and reports that provide insights about the company’s operations.
They also provide insights about the company financials to business owners and other stakeholders and give a summary of the overall financial health of the business. The initial processes involved in any accounting process are usually the vestige of a bookkeeper. Transaction recording lays a foundation for the final accountancy processes, and an accountant can handle this as well. Therefore between bookkeepers vs. accountants, the limitations of the bookkeeper’s skills analysis and interpretation of financial data are the main difference in professions. On the other hand, an accountant reviews the bookkeeper’s financial records and statements to facilitate analytical interpretations. The accountant has a four-year degree in accounting, which enables him or her to analyze and interpret the bookkeeping data; reflecting a company’s financial health. Without focusing all that much on the overall financial analytics, a bookkeeper maintains as accurate a record as possible.
An accountant typically has a degree and relevant work experience, however, there is no formal certification process for becoming an accountant. A bookkeeper could call himself an accountant but it would be inadvisable to do so unless he had the relevant education or some serious working experience that included the various facets of accounting . For instance, a bookkeeper might recommend the software for a double entry system of accounting, but the accountant would approve it. The primary objective of a bookkeeper is to accurately record all financial transactions logically and systematically.
CFAs must also pass a challenging three-part exam that had a pass rate of only 39% in September 2021. The point here is that hiring a CFA means bringing highly advanced accounting knowledge to your business.
Accountants usually hold an accounting degree and are registered as a certified public accountant . CPAs must pass the CPA exam in order to use that title; this credential is highly valued in the accounting profession.
Owners depend on accountants for more than reporting numbers, though. They also rely on their accountant’s expert advice for financial forecasting to help make critical business decisions. There’s also a blurring of roles, with some accountants providing bookkeeping services and some bookkeepers giving strategic business accounting vs bookkeeping advice. Plus, today, most bookkeeping software can create financial statements—a task usually reserved for accountants. Every step in the accounting cycle must be performed at the end of each month and year. Without an accountant or bookkeeper, it’s up to the business owner to accomplish them on their own.
While daily transactions are better looked over by a bookkeeper, the accountant is vital to a company’s decision making with periodic financial reviews. Most recently she was a senior contributor at Forbes covering the intersection of money and technology before joining business.com. Donna has carved out a name for herself in the finance and small business markets, writing hundreds of business articles offering advice, insightful analysis, and groundbreaking coverage. Her areas of focus at business.com include business loans, accounting, and retirement benefits. Doing your accounting yourself may be fine when your business is small, but if your business is in growth mode, it may be time to bring in someone to help. You could start by contracting with a bookkeeper who balances the books once a month and a CPA who handles your taxes. Then, as your bookkeeping needs increase, bring someone on staff.