- Although the terms "accountant" and "bookkeeper" are occasionally used interchangeably, the professions are vastly different.
- Accountants have more education and training requirements than bookkeepers along with higher pay averages.
- Many accountants get their start as bookkeepers as a way to gain experience in the field before becoming CPAs.
The terms "accounting" and "bookkeeping" are too often used interchangeably in business, leading many to confuse the roles or assume they are the same thing. Even veteran business owners or professionals may be surprised to learn of the significant differences between an accountant and a bookkeeper, as well as the roles they perform.
At first glance, these differences may sound like semantics, but the distinction is important because of one glaring difference between bookkeepers and accountants: cost.
Because accountants typically charge a much higher hourly rate than bookkeepers, relegating basic bookkeeping tasks to an accountant will leave you heavily overpaying for basic financial services.
Bookkeepers vs. accountants: What's the difference?
A bookkeeper is an administrative professional who follows a specific set of procedures or tasks related to the day-to-day financial management of a business. While it may require specific skills, software knowledge and training, becoming a bookkeeper requires no formal education or certification. Still, bookkeepers typically take a bookkeeping course or certification program to stay competitive in the field. As an example, the National Association of Certified Public Bookkeepers offers a licensing program for industry professionals who wish to demonstrate their expertise in the area. Bookkeepers may start off as interns to gain on-the-job experience before landing a permanent placement.
An accountant is a more specialized financial professional who handles higher-level financial structuring and analysis for a business. Becoming an accountant requires a four-year college degree in accounting or in business administration with additional specialized training.
Also critical is the distinction of certified public accountant, or CPA, which is a higher standard of accounting professional who has completed sufficient training to pass the Uniform Certified Public Accountant Examination. This certification ensures that all CPAs operate according to standardized methods and ethical requirements. CPA exams are rigorous, consisting of four different tests administered over a four-hour period. The minimum score to pass the CPA examination is 75, according to the American Institute of CPAs.
While some accounting firms – or accounting departments within large companies – may comprise both certified and noncertified accountants, it is essential that at least one CPA holds ultimate responsibility for your business's financial management.
To help you match the right task with the right professional for your business, let's break down the tasks most commonly assigned to bookkeepers and accountants, respectively.
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Common bookkeeping tasks
With proper standards and procedures in place, a trained bookkeeper can easily manage these simple, repetitive tasks:
- Preparing and sending invoices
- Recording payments from customers
- Monitoring late payments and sending payment reminders
- Recording, processing and paying invoices from suppliers
- Monitoring and recording inventory changes
- Processing petty cash transactions
- Categorizing credit card and other daily expenses
- Processing payroll
Depending on the size of your business and the frequency of your bookkeeping needs, you might choose to handle basic bookkeeping tasks yourself, assign these tasks to an existing employee, contract with a third-party bookkeeping service or hire a full-time bookkeeper for your company. Some accounting firms also offer bookkeeping services at a separate rate.
Specialized responsibilities for accountants
These higher-level, more specialized tasks should be handled by a CPA (or by noncertified accountants with the careful oversight of a CPA):
- Creating and managing the chart of accounts
- Accruing and deferring revenue and expenses
- Designing and maintaining financial statements
- Building financial forecasts
- Creating a budget and comparing it to actual expenses
- Generating customized financial reports to address specific issues
- Determining estimated taxes and preparing tax documents
- Monitoring issues related to financial and tax compliance
- Identifying potential tax write-offs or other profit-maximizing opportunities
Because these tasks, while important, tend to be relatively infrequent, most small and midsize businesses work with an outside CPA or accounting firm on a contract basis to meet their accounting needs.
The bottom line: Hiring a bookkeeper will save you money with your accountant
Too often, small businesses tend to leave bookkeeping tasks undone or poorly completed, forcing the business's CPA to spend their time catching up with these tasks before they can complete higher-level accounting duties. In fact, this issue is so widespread that many accounting firms maintain in-house bookkeepers to delegate these otherwise-unassigned tasks.
Particularly if you pay your accountant on an hourly basis, this can mean spending a mint on administrative tasks that could be completed at a much lower cost.
To reduce costs while maximizing the effectiveness of your financial team, work with both a quality bookkeeper and a certified public accountant, make sure they are using the same standardized methods and best practices, and encourage them to communicate regularly. Understanding and properly delegating these roles will save you money and ultimately improve your bottom line.