Both bookkeepers and accountants may charge a flat rate or, more commonly, by the hour. If all you need is to set up a financial record-keeping system for your new location, you can hire a bookkeeper. If you plan to hire a bookkeeper or accountant, make sure to ask your potential hire what they are comfortable and experienced in doing. Also, ensure that their offerings align with your business needs and can help you achieve desired results. The data provided by the accountant can be shared across departments, paired with a request for each one to ideate ways to shave a few tenths of a percent off their current costs.

Bookkeeping is a great starting point if you are interested in the field but not fully committed and want to test the waters. You may also be an ideal bookkeeping candidate if you want a good job with a respectable wage and decent security but may not be looking for a long-term career. Bookkeeping offers much lower barriers to entry, and the competition you face in the job search is less fierce. It is not an unusual career move for a bookkeeper to gain experience at a job, study, get certified, and work as an accountant. You must have a bachelor’s degree from a college or university that is accredited in order to work as an accountant or a bookkeeper.

The complexity of a bookkeeping system often depends on the size of the business and the number of transactions completed daily, weekly, and monthly. All sales and purchases made by your business need to be recorded in the ledger, and certain items need supporting documents. The IRS lays out which business transactions require supporting documents on their website. Bookkeeping is the process of recording daily transactions in a consistent way, and is a key component to gathering the financial information needed to run a successful business. A bookkeeper with professional certification shows they are committed to the trade, possess the skills and expertise required and are willing to continue learning new methods and techniques. There are no formal educational requirements to become a bookkeeper, but they must be knowledgeable about financial topics and accounting terms and strive for accuracy.

The primary difference between accountants and bookkeepers is that bookkeepers focus only on documenting financial information and transactions, while accountants provide advisory and analytical services. An accountant records, analyzes, and interprets financial information and transactions. They typically present insightful financial data to stakeholders and other decision-makers, who use it to steer the business in the right direction. As a small business owner, employing an experienced bookkeeper who can set up your books and maintain them accurately will free up invaluable time. Likewise, leaning on a skilled accountant can help you understand your business beyond the day-to-day and set you up to make smart choices about the future. Investing in both a bookkeeper and an accountant on your team ultimately sets up your business for the most success while keeping you free to focus on what you’re truly passionate about.

To become one, you have to either have worked at the IRS or pass an EA examination. A bookkeeper will complete these steps and use the chart of accounts to post every journal entry and financial transaction within the general ledger. As the function of accounting is typically more diverse than bookkeeping, hiring an accountant may allow you some flexibility. Your accountant can analyze your current financial decision-making process and recommend ways to better incorporate financial data.

Accountant vs bookkeeper? Which should you hire

It’s true that bookkeeping and accounting are often confused with each other because of their relation to financial reporting. But while these two are related, interdependent, and essential business functions, bookkeeping and accounting are distinct from one another, too. The purpose of bookkeeping is to maintain a systematic record of financial activities and transactions chronologically. The purpose of accounting is to report the financial strength and obtain the results of the operating activity of a business. An enrolled agent (EA) is atax professional authorized by the United States government. Their job is to advocate and assist taxpayers when they have issues with the Internal Revenue Service.

• Once the bookkeeper posts all transactions, the accountant generates a trial balance that lists all business accounts and balances.
• Which of the following most clearly differentiates accounting and bookkeeping?
• If you are an external auditor, you will most likely have a job at a public accounting firm, and you will need to have a CPA license, plus a college degree, and often a master’s degree.
• For the most part, though, your accountant uses the books to assess your business and strategize for the future.
• They both have shared job duties for recording, verifying, and reporting the company’s transactions.

The basis of the double-entry bookkeeping system is that every transaction has two parts and affects two ledger accounts. These include white papers, government data, original reporting, and interviews with industry what are available for sale securities experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.

Bookkeepers handle the day-to-day tasks of recording financial transactions while accountants provide insight and analysis of that data and generate accounting reports. They both have shared job duties for recording, verifying, and reporting the company’s transactions. The main difference between these careers is the level they hold within a company. These titles can generally be used interchangeably, but in larger companies, the bookkeeper typically oversees the accounting clerks. However, bookkeeping and accounting clerk jobs are expected to decline, with the BLS projecting a 5% fall in jobs over the same period.

Career Paths

Erika Rasure is globally-recognized as a leading consumer economics subject matter expert, researcher, and educator. She is a financial therapist and transformational coach, with a special interest in helping women learn how to invest. We believe everyone should be able to make financial decisions with confidence. Before joining the team, she was a Content Producer at Fit Small Business where she served as an editor and strategist covering small business marketing content.

What credentials does an accountant need?

A bookkeeper handles the company’s billing, generates payment receipts, and issues statements for unpaid accounts. Ashley Donohoe started writing professionally in 2010 about career, business and technology topics. She has a Master of Business Administration degree from Western Governors University along with eight years of experience managing all aspects of her small business.

Advantages of an accountant

Bookkeeping is the process of recording all financial transactions a business makes from its opening to its closing. This practice helps establish the company’s financial outcomes and allows owners to track where their money is going. Below, we’ll take a closer look at bookkeeping vs accounting, their key differences, and how working with bookkeepers and accounts can benefit your small business.

How to decide if you need a bookkeeper or accountant

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. Both accounting and bookkeeping play an important financial role in business, there is a difference between the two. Bookkeeping is a direct record of all purchases and sales your business conducts, while accounting is a subjective look at what that data means for your business and cash flow strategies. An accountant can be considered a bookkeeper, but a bookkeeper can’t be an accountant without proper certification.

The Differences Between Bookkeepers vs. Accountants vs. CPAs

While these services come at a cost, they can maximize the accuracy and efficiency of vital financial management processes. According to the BLS, the median salary for an accountant in 2021 was $77,250 per year or $37.14 per hour. However, their years of experience, your state and the complexity of your accounting needs affect the price.