What’s The Difference Between Bookkeeping & Accounting?

If you’re scratching your head wondering what’s the difference between bookkeeping and accounting, this post is for you.

Ah, finances and its … bookkeepers? Accountants? CPAs? It’s no surprise that people use all those terms – and more – interchangeably. They all sound relatively the same and all share an industry that involves money and numbers, so they’re all the same, right? 

Wrong. Well, kinda. Sorta. If this were Facebook, we’d say ‘It’s complicated.’

Not every bookkeeper is an accountant – though every accountant is technically qualified to be a bookkeeper – and while both need to be sticklers for accuracy and knowledgeable about key financial topics, the main difference between a bookkeeper and an accountant is that an accountant has a bachelor’s degree in accounting or similar.

Clear as mud, right? Right.

Maybe this will help:

  • Bookkeepers: Bookkeepers have two to four years experience or an associate’s degree, with their work overseen by either an accountant or the small business owner whose books they are doing. They record financial transactions, which lay the foundation for … 
  • Accountants: Accountants have a bachelor’s degree in accounting – or a finance degree considered an adequate substitute – and interpret, classify, analyze, report and summarize financial data. 

It’s getting a little clearer, right?

Now, let’s dig deeper to demystify each so you know which one is right for your business.

Bookkeepers: What They Do

So what, exactly, do bookkeepers do?

  • Pay client’s bills on a weekly basis 
  • Bank statement reconciliation
  • Journal and data entry (coding)
  • Provide clients with weekly & monthly reports
    • Weekly accounts receivable aging
    • Weekly accounts payable aging
    • Monthly aging 
    • Monthly balance sheet 
    • Monthly P&L
    • Monthly budget to actual
    • Monthly statement of cash flow 
  • Custom reports 
  • Maintain and manage the chart of accounts
  • Debit/credit card reconciliation
  • 1099 preparation
  • Payroll, including working with a verified vendor to set-up the payroll account, schedules and processing

Accountants: What They Do

Now, what do accountants do?

  • Preparing and adjusting entries
  • Preparing financial statements
  • Completing income tax returns
  • Financial analysis and strategy
  • Tax strategy, advice and tax planning
  • Financial forecasting
  • Business establishment assistance
  • Auditing
  • Corporate reporting and compliance
  • Superannuation fund advice
  • Financial management advice

And BONUS! An accountant can do all of the above listed for bookkeepers, too – though what they’d be willing to handle depends on the accountant.

Put An Experienced Financial Professional In Your Corner

Listen. We’ve been where you are, almost literally. To outsource or not to outsource – that is the question.

We understand that entrepreneurship is a journey, not a destination. If you’re at a crossroad wondering who you can trust to lead the financial side of your business, you’re not alone. Thankfully, we’ve helped countless businesses navigate the same terrain by matching them with the right person to help with their exact needs so they are free to pursue growth with a trusted financial partner by their side. 

So when your business reaches the point when you consider virtual, outsourced financial solutions, the decision – and pressure – to bring in the right financial leadership may prove daunting. But it shouldn’t.

Check out our Ultimate Guide to Bookkeeping for more about small business bookkeeping.