The terms ‘accountant’ and ‘bookkeeper’ are often used interchangeably by people outside the industry, but they aren’t the same thing at all. Both accountants and bookkeepers play a crucial role in the finance department, but what do those roles entail? In this article, we explain the key differences between bookkeepers and accountants ― and why those distinctions matter.
What does a bookkeeper do?
“A bookkeeper is responsible for recording daily financial transactions, updating a general ledger, and preparing trial balances for perusal by accountants.”
- Forbes
Broadly speaking, bookkeepers are responsible for recording a business’ day-to-day financial transactions. They systematically record financial data ― such as sales, purchases, payroll, and expenses. They both ‘keep the books’ and ensure they’re balanced — meaning that the credit and debit columns of the account ledger balance each other out — and may even assume accounts payable (AP) and accounts receivable (AR) responsibilities. Bookkeepers often use accounting software (ERPs like Intuit QuickBooks and Oracle NetSuite) to maintain accurate records.
The bookkeeping role will vary depending on your business’ organizational structure and objectives. Your bookkeepers’ responsibilities should align with the needs of your business, but might include:
- Record keeping and recording financial transactions: accurate financial record-keeping is vital for regulatory compliance, cashflow management, and to help businesses prepare their tax documents.
- Reconciliation: reconciliation involves checking transactions against supporting documentation, ensuring bookkeepers can recognize and address discrepancies or mistakes.
- Payroll management: some bookkeepers are also charged with payroll management: effectively, ensuring employees are paid the right amounts at the right times, and that the appropriate bonuses and deductions are factored in.
- Financial reporting: bookkeepers often prepare various financial statements and other documents to communicate important financial information to other stakeholders within the business.
- Data entry: data entry is a crucial albeit mundane aspect of bookkeeping and accounting. Data must be accurately recorded in general ledgers and in your accounting software.
- Expense tracking: bookkeepers are sometimes tasked with tracking and managing employee expenses — processing claims, chasing approvals, and managing reimbursement.
- Tax preparation: bookkeepers help to prepare documentation and financial information to prepare businesses for their tax commitments.
What does an accountant do?
“The term accountant refers to a professional who performs accounting functions such as account analysis, auditing, or financial statement analysis.”
- Investopedia
It can be said that accountants have a more strategic, advisory role than bookkeepers. Although there is some overlap between the two disciplines, accountants generally focus on interpreting and analyzing financial data. While bookkeepers accurately record financial records, accountants take those records and use them to prepare financial statements, tax returns, and other reports.
Accountants can also interpret and analyze financial information to provide insights into a company’s health, offer advice on financial strategy and tax planning, and suggest ways to improve cash flow and profitability. Accountants may also perform audits and maintain compliance with financial regulations.
Qualifications
Another key distinction between bookkeepers and accountants is the education and qualifications required to perform each role. Bookkeepers don’t necessarily require formal qualifications beyond a high school diploma or associate degree, but they can acquire further certification to increase their value and employability.
Accountants, meanwhile, generally require a bachelor’s degree in a related field, as well as further education or professional certification such as a masters in accounting, a CPA (Certified Public Accountant), or a CA (Chartered Accountant) qualification ― which can require extensive on-the-job training. Most mid- to senior-level accounting roles require a CPA or equivalent, and accountants without the necessary certification may limit their employability and earning potential.
In a nutshell
In the simplest terms, the difference between a bookkeeper and an accountant is that a bookkeeper keeps a record of financial transactions, while accountants analyze those records. For that reason, accounting tends to be a more satisfying proposition for finance professionals.
The reality tends to be more nuanced, however, and many accountants find themselves performing manual data entry and other more mundane back-office tasks ― particularly in the accounts payable function.
Accounts payable automation solutions can help accountants get back to what they do best: interpreting financial data and adding strategic value to the business. By automating time-consuming manual tasks like invoice processing, chasing approvals, and 3-way matching, AP accountants can gain hours back in each workday ― empowering them to focus on more rewarding, value-add responsibilities.
