The role of accountants vs bookkeepers differs in many aspects, and if you’re confused about their roles, this post will help to clear up any misunderstandings. In the simplest of terms, the job of an accountant cannot be done by a bookkeeper, yet accountants can do your bookkeeping.
While you might think of giving the bookkeeping role to an accountant, you’ll realise that the large volume of records to be kept will take away from an accountant’s essential tasks.
Primary roles: Accountants vs bookkeepers
Accountants and bookkeepers work closely together, with bookkeepers providing the necessary financial data that an accountant will assess. Both utilise mathematics and number-crunching, and they need an eye for detail as small mistakes could lead to major disruptions down the line.
Activities & skills
Accountants work more on forecasting financial data. They will make financial decisions and advise management on ways to increase profit margins. They rely heavily on the accuracy of books prepared by bookkeepers and analyse the financial data.
They also look into the processes behind the record-keeping to implement best practices and keep business compliant and out of risk. Auditing falls into their role and could be called upon when applying for a bank loan.
Bookkeepers track a business’s finances. The bookkeeper works in the general ledger and thus knows of every transaction that occurs in the company. Sub-tasks include different ways of recording entries and implementing best practices for single or double entries.
Their involvement is crucial on a day-to-day basis, which would be the main difference between accountants’ vs bookkeepers’ time in the office. With respect to their accuracy in filing, they too help keep businesses compliant. Bookkeepers also process payroll. Using their knowledge of the payments that a business makes, they may deal with reimbursements if ever there is such a case.
You may now understand why giving your bookkeeping to an accountant will fill up their working hours, not to mention the increased cost of hiring the expert.
Documents prepared
Accountants handle documentation on a business’s corporate tax returns and any financial advice behind decisions. They too can prepare cash-flow or balance sheet statements, but often work on strategies related to business goals.
Bookkeepers verify documents and compile budget reports. If a company has software to keep their books, it is still necessary to have someone check up on this system. Besides precision and attention to detail, bookkeepers need to be tech-savvy or at the very least adaptable and open to learning.
Tax roles
The complexity of accountant’s vs bookkeeper’s roles in tax varies significantly, with an accountant’s tasks being more complex.
Bookkeepers are not authorised to perform in-depth services with regard to taxation; however, they may perform calculations on your business’s tax deductions. They have the task of keeping invoices compliant with the VAT act and thereby preparing all the documentation for accountants come tax season.
Strategizing, filing, and planning for tax season are the roles of your accountant. Chartered accountants are allowed to sign off on your tax returns if all procedures are met.
Certifications, Salaries & the journey ahead
If you’re one of the few people who thrive on number crunching and interpretation, then you’ve likely got the chance to advance rapidly through your career. For many accountants, their years of study are long but pay handsomely in the end.
Education
While it is possible to become a self-taught bookkeeper, most would have to supplement courses and almost always become certified before entering their line of work.
Accountants have to attain a degree, in either accounting business or finance, and pass standardised exams while oftentimes needing to undergo continual training to remain certified accounting practitioners. Many accounting career paths, which we will touch on in a moment, require specialised exams and a master’s degree.
Salary
It is a known fact that accountants earn more than bookkeepers, yet starting salaries vary. In the long term, accountants also tend to earn more and it is worthwhile for bookkeepers to study further to attain the qualification. It is not unheard of for bookkeepers to work freelance and earn wages, but more often than not they are hired for the long term.
Career paths
Bookkeeping can be the first step in your accounting journey, but most accountants go through a period of formal education and hours of practicing. Accountants earn more with their certifications and are able to advance into spaces of tax specialization or auditing. Future careers could include chartered accounting, becoming an enrolled agent, and many more.
Summary: Key differences
The differences in accountant’s and bookkeeper’s education, initial and long-term earnings, tax roles, and business contributions are considerable. While bookkeeper’s salaries are lower, their overall skillset can still help small businesses to remain compliant while keeping records straight for an external audit.
Accountants can take up managing roles, given their formative background, and can bring a business more profit and help manage the cash flow.
While bookkeepers handle journals and the general ledger, accountants make use of this data to create financial projections that help grow small businesses.
