In simple terms, bookkeepers record financial transactions, while accountants classify, analyze, interpret, report, and summarize this data.
A bookkeeper is responsible for the initial classifications and recording transactions such as bills paid, daily sales, payroll, and other expenditures. A bookkeeper’s role in accounting is not to be considered as the end of the line. The accountant should take over. In accounting processes, an accountant may be required to coordinate and indemnify books or records that are presented by a bookkeeper.
An accountant, on the other hand reviews financial statements and records of the bookkeeper to aid in analytical interpretations. An accountant holds a four year accounting degree, which allows him or her analyze and interpret bookkeeping data. This information can be used to assess a company’s financial health. A bookkeeper keeps a complete record of financial transactions, without focusing too much on them.
Bookkeepers and Accountants: Job Descriptions
The duties of a bookkeeper
The bookkeeper is usually responsible for the initial steps in any accounting process. An accountant can also handle transaction recording. Transaction recording is the foundation of final accounting processes. The main differences between accountants and bookkeepers are their limitations in the analysis and interpretation of financial information.
A bookkeeper is able to record daily transactions of financial nature. Accounting software has automated many of these chronicle processes. Bookkeepers can also summarize and classify financial reports data. These bookkeepers are called full-charge bookkeepers. They may be paid more than regular bookkeepers, but less than certified accountants.
Description of the Job for an Accountant
Accounting standards, principles and requirements are followed by accountants for the analysis and interpretation financial data. The accountant reports on the financial performance of a company and its conditions.
- Analyse of financial transactions
- Summary of business records and statements
- Interpretation of financial data
- Review information classified
- Summarization of economic performance
- Reporting on company financial condition
Other members of the accounting profession are certified public accountants and tax accountants.
There are similarities between an accountant and a bookkeeper
bookkeeping may seem very similar to accounting to a layperson without much difference. Basic accounting knowledge is required to enter either bookkeeping and accounting. Small and medium-sized businesses may only employ bookkeepers who are able to handle accounting processes.
These bookkeepers will be responsible for generating financial reports as well as transaction classification processes. This is a task that accountants can’t do. A company might not require an accountant if accounting software has automated reports and memorized transactions. This accountant will need to create transaction records and classify bookkeepers in order to start the accounting process.
There are other differences between bookkeeping and accounting
An accountant is a supervisor for bookkeepers because of the knowledge required to manage complex accounting processes. A company’s accountant can be a consultant to its bookkeepers, helping them ensure accuracy in financial processes. An certified public accountant, who is the highest expert in the field accounting, requires only a basic understanding of the subject and certification.
A Certified Public Accountant can provide practical business advice and a deeper understanding of the accounting functions of a company. A Certified Public Accountant can offer advice and suggestions that could require the modification of the books in order to meet cost-practical deduction eligibility situations.
A tax accountant is a specialist in taxation and regulations associated with business mergers. These accountants can also provide advice on tax structures and tax deductions.
Rules and Expectations of Bookkeepers vs. Accounting Roles
There are rules and regulations that govern what an accountant or bookkeeper can do, in addition to their expertise. Although the areas of expertise may overlap, it is up to the entrepreneur when they require the services of one or the other. It is not economically cost-effective to pay an accountant for a job that a bookkeeper can do more efficiently and at a lower price.
The licensing granted to a Certified Public Accountant for issuing audited statements also limits the abilities of a bookkeeper. These documents are required by companies to comply with regulations regarding permits and licenses, as well as when dealing with financial institutions like banks.
Which is better: a bookkeeper or an accountant? Accounting?
A bookkeeper and accountant are essential for certain industries and the financial acumen of small, medium and large entrepreneurs. A bookkeeper can be more attentive to daily transactions, but an accountant is crucial for company decision-making through periodic financial reviews.
The following factors will help you determine when an accountant or a bookkeeper is required to understand your business.
- What type of commerce the company is involved
- The inventory size of the company
- The number of employees in the company
- The wide range of services offered by the company
- The company’s level of expertise
- How much financial support the company requires
During the early stages of business growth, entrepreneurs and business owners need to have access to financial services providers like accountants and bookkeepers. All the information is needed to make informed decisions. This is both cost- and time-efficient. Small and medium enterprises don’t need to spend their time looking at financial statements when they should be focusing on their business.
A bookkeeper is not enough for your business, regardless of their authority or training. A bookkeeper might not know the deadlines for filing tax documents, which could lead to penalties from revenue authorities. It is important to understand the business requirements before you hire a bookkeeper or an accountant.
It may also be determined by the amount of money available for expenditure. Small entrepreneurs may handle their bookkeeping themselves and only need an accountant for tax accounting or complex financial processes.
You can outsource your company’s financial services to bookkeepers and accountants
Business is constantly changing. To keep businesses afloat, regulations such as taxation and licensing must be met. Transparent, trustworthy financial statements are required for all transactions that involve partners or funding institutions. A business manager who can assess the accounting needs of a company and decides when or if to hire an accountant or a bookkeeper is the best.