The Difference Between “Bookkeeper” & “Accountant” Small Business Accounting

bookkeeper vs accountant

A CPA is an accountant who has met their state’s requirements and passed the Uniform CPA Exam. They must also meet ongoing education requirements to maintain their accreditation. Bryce Warnes is a West Coast writer specializing in small business finances. Also, if you’re behind on your bookkeeping and you need to get caught up, expect to pay extra. Retroactive or historical bookkeeping is either negotiated as one lump sum, or charged according to how many months of catch-up you need done. Bookkeepers’ rates vary according to their level of experience, their location, and any specializations (e.g. specific industries they have experienced with).

  • Companies hire bookkeepers on a contract or full-time based on their needs and budget.
  • Bookkeeping is a great starting point if you are interested in the field but not fully committed and want to test the waters.
  • Simply put, bookkeeping is more transactional and administrative, concerned with recording financial transactions.
  • Most states require accountants to be licensed by their state board of accountancy before they can offer services publicly.
  • While you wouldn’t have a neurologist track your calories, you wouldn’t have your CPA take care of bookkeeping.

Accountants have a more advanced role than bookkeepers in that they analyze data to make recommendations about how a business can improve its operations or save money. A bookkeeper will complete these steps and use the chart of accounts to post every journal entry and financial transaction within the general ledger. For a long-term career, accounting offers much more upward mobility and income potential. The education required to be competitive in the field is greater, but the payoff down the road can be considerably higher. There are critical differences in job growth and salaries between the two. Growth for accountants and auditors is expected to continue for the next several years.

Responsibilities for an Accounting Consultant

According to the Bureau of Labor Statistics, the median pay for accountants was $77,250 per year ($37.14 per hour). A bookkeeper maintains the financial records of business transactions on a daily basis. Bookkeepers are essentially keeping track of all the money that comes in and goes out of the business. Accounting focuses on using that data to assess the financial health of a business and make data-driven business decisions. As bookkeepers keep a company’s records updated, it assists managers to make effective business decisions.

  • If your business requires the support of a CPA-qualified accountant, their salaries are typically higher than those of non-certified accountants.
  • They are more focused on providing an accurate report to the government than on developing recommendations for you to operate your business more efficiently.
  • A CPA has been certified by the Board of Accountancy for your state, and met requirements for education, experience, and a code of ethics.
  • It proves that the bookkeeper has signed the AIPB’s Code of Ethics and has successfully fulfilled its certification standards.
  • The bookkeeper posts accounting transactions in the general ledger using documents such as receipts, invoices, and other records of business activity.

Simply put, bookkeeping is more transactional and administrative, concerned with recording financial transactions. Accounting is more subjective, giving you insights into your business’s financial health based on bookkeeping information. It can be difficult to gauge the appropriate time to hire an accounting professional or bookkeeper – or to determine if you need one at all. While many small businesses hire an accountant as a consultant, you have several options for handling financial tasks. According to professional services agent Ageras, there are several advantages to hiring a bookkeeper to file and document your business’s financial records. The basic role of a CPA is to maintain and keep a regular check on financial accounts for companies, governmental bodies, and individuals.

Sync your clients and payment information to QuickBooks Online

With bookkeepers, there are a lot of minutiae involved, and keen attention to detail is paramount. Accountants, on the other hand, tend to use the bookkeeper’s inputs to create financial statements and periodically review and analyze the financial information recorded by bookkeepers. We’ve listed some of the key differences when it comes to the requirements and job market for each. CPAs enjoy higher earning potential, global exposure, better job opportunities, and more respect in general compared to that of a bookkeeper. An auditor issues a report about the accuracy and reliability of financial statements based on the country’s local operating more, or chief financial officer in any company.

bookkeeper vs accountant

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. A bookkeeper records and classifies a company’s daily financial transactions (e.g., sales, payroll, payment of bills, etc.). Their focus is on accurate record keeping and summarizing data, and less focused on interpreting the data and analytics. The NACPB offers credentials to bookkeepers who pass tests for small business accounting, small business financial management, bookkeeping and payroll. It also offers a payroll certification, which requires additional education.

Who Do I Hire? Accountant vs CPA vs Bookkeeper

There is a difference between an accountant and a certified public accountant (CPA). Although both can prepare your tax returns, a CPA is more knowledgeable about tax codes and can represent you if you get audited by the IRS. To what is a bookkeeper earn the certified public bookkeeper license, bookkeepers must have 2,000 hours of work experience, pass an exam, and sign a code of conduct. They must take 24 hours of continuing education each year to maintain their license.

bookkeeper vs accountant

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