The Big Difference Between a Bookkeeper and an Accountant

While having an adequate bookkeeping system in place may be sufficient for many small businesses, it does not diminish the importance of an accountant. Bookkeeping and accounting share some commonalities, but they are very different things. Learn about those differences and why both can be important to a small business.

Both accounting and bookkeeping are important for businesses, but they serve different purposes. Bookkeeping and accounting may appear to be the same profession to an untrained eye. This is because both accounting and bookkeeping deal with financial data, require basic accounting knowledge, and classify and generate reports using the financial transactions. At the same time, both these processes are inherently different and have their own sets of advantages.

QuickBooks

The education required to be competitive in the field is greater, but the payoff down the road can be considerably higher. Bookkeepers line up all the small pieces of a company’s financial records, and accountants view and arrange those pieces. Other programs charge annual or monthly fees and offer advanced features such as recurring invoices or purchase orders. While these services come at a cost, they can maximize the accuracy and efficiency of vital financial management processes. Your business’s accounting needs might not require the in-depth expertise of a hired professional.

It is the first step in the holistic accounting process, preparing your business accounts for more complex tasks. They are required to know about tax law, and ideally, they should be able to utilize bookkeeping software. Bookkeeping is a series of day-to-day tasks designed to organize, record, and track your business’s financial details. In other words, it is properly recording the figure, date, and business category of each and every purchase, receipt, sale, and payment. Accounting often requires more education than becoming a bookkeeper, where most accountants hold undergraduate or graduate degrees or even MBAs in accounting, economics, or finance.

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More businesses are adding Afterpay as one of the payment options, which is a great way to improve customer experience. The U.S. doesn’t have a standardized qualification for practicing bookkeepers. The U.S. Bureau of Labor Statistics states that those practicing bookkeeping should hold at least a high school diploma, backed up by at least 2 to 4 years of job experience. These topics remain hot because there’s often a lot of confusion about it. As a small business owner, you have to do your best to allocate your resources wisely.

Bookkeeping vs accounting: What’s the difference?

When a https://quick-bookkeeping.net/ wants to leap to being an accountant, they will need to take the CPA exam, plus earn a bachelor’s degree , if they do not have one already. Fifty states plus the District of Columbia require accountants to earn 150 credit hours of college education before taking the national four-part Uniform CPA exam. For a long-term career, accounting offers much more upward mobility and income potential.

Because the records are posted on a daily basis, you become more accountable to yourself and the business. Also, if there’s any dispute between you and your suppliers or customers, you can easily resolve it from your records. Bookkeeping helps you to stay organized and prepare payroll, budget, and tax returns.

What credentials does a bookkeeper need?

Depending on the size of a retail store, the owner can hire a staff or outsource the responsibility to a third party. Outlets that are part of a chain store keep their own books besides that of the main office. This way, you can discard one method and invest more in the other to boost your revenue.

• Accountants and bookkeepers work with numbers and financial data all day long.
• Accountants typically have a bachelor’s degree in accounting and are also registered Certified Public Accountants .
• Keep this in mind when filtering applications; try not to judge applicants based on their education alone.
• Both accounting and bookkeeping require a high school diploma or equivalent.
• It proves that the bookkeeper has signed the AIPB’s Code of Ethics and has successfully fulfilled its certification standards.
• These accounting detectives’ work often centers around legal issues.