Bookkeeper vs Accountant

Difference Between Bookkeepers and Accountants

The key difference between bookkeeper and accountant is that bookkeeper is responsible for performing the bookkeeping activities in the company where financial transactions are recorded in a systematic manner, whereas, Accountants are responsible for accounting of the financial transactions that have occurred in the past by the company as well as reporting the financial affairs of the company which shows the clear financial position of company.

A bookkeeper is a person without a college degree in accountancy who is responsible for the data entry tasks. Some of the tasks included are:

An accountant will hold a professional degree in accounting and continue the operations performed by the bookkeeper. Some examples are:

Bookkeeper-vs-Accountant

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Sub-Categories

Bookkeeping Sub Category:

  1. Single-entry book-keeping
  2. Double-entry book-keeping
  3. Virtual book-keeping

Accountants Sub Category:

  1. Financial accountingFinancial AccountingFinancial accounting refers to bookkeeping, i.e., identifying, classifying, summarizing and recording all the financial transactions in the Income Statement, Balance Sheet and Cash Flow Statement. It even includes the analysis of these financial statements.read more
  2. Management accounting
  3. Cost accountingCost AccountingCost accounting is a defined stream of managerial accounting used for ascertaining the overall cost of production. It measures, records and analyzes both fixed and variable costs for this purpose.read more
  4. HR accounting
  5. Responsibility accountingResponsibility AccountingResponsibility accounting is a system of accounting where specific persons are made responsible for the accounting of particular areas and cost control. In this type of accounting system, responsibility is assigned based on a person’s knowledge and skills.read more

If you want to learn Cost Accounting professionally, then you may want to look at 14+ video hours of Training on Cost Accounting

Bookkeeper vs. Accountant Infographics

Let’s see the top 7 differences between Bookkeeper vs. Accountant.

Bookkeepers vs Accountants

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Key Differences

  1. Bookkeepers are required for identifying, quantifying, recording, and eventually, classification of financial transactions. In contrast, accountants are required to summarise, interpret, and communicate the latest financial transactions classified in the ledger account.
  2. Financial decisions cannot be made exclusively based on bookkeeping records but can be considered based on accountant records.
  3. Bookkeepers are not required to create financial statements, but accountants are responsible for preparing for the same.
  4. The senior management generally does not get involved in the functioning of the bookkeepers. However, they would take an interest in the work of the AccountantsWork Of The AccountantsAn accountant is a finance professional responsible for recording business transactions on behalf of a firm, reporting the firm’s performance and issuing financial statements. Thus, an accountant plays an important role whether it is a small domestic entity or a large multinational company.read more as they require the information for making future management decisions.
  5. The tools used by bookkeepers are Journals and Ledgers, and that of accountants are the balance sheetBalance SheetA balance sheet is one of the financial statements of a company that presents the shareholders' equity, liabilities, and assets of the company at a specific point in time. It is based on the accounting equation that states that the sum of the total liabilities and the owner's capital equals the total assets of the company.read more, income statement, cash flow statement, etc
  6. Bookkeepers do not require any special skills since most of the activities are mechanical. Still, accountants need specialized analytical skills due to the level of complexity involved in maintaining the books of accountsBooks Of AccountsThe best accounting books are - Accounting made simple: accounting explained in 100 pages or less, A brief history of economic genius paperback, Accounting all-in-one for dummies, Accounting handbook (Barron’s accounting handbook), The tax and legal playbook: game-changing solutions to your small.read more. It will require a professional degree in accounting and also some past work experience in the same.

Bookkeeper vs. Accountant Comparative Table

Basis of ComparisonBookKeeperAccountant
RoleRequired for identification, classification, and recording of all financial transactions.Involved in interpreting, summarising and communicating the financial transactions
Tools UsedJournals and LedgersLedgersLedger in Accounting, also called the Second Book of Entry, is a book that summarizes all the journal entries in the form of debits & credits to use for future reference & create financial statements. read moreProfit & Loss, Balance Sheet, and Cash Flow StatementCash Flow StatementStatement of Cash flow is a statement in financial accounting which reports the details about the cash generated and the cash outflow of the company during a particular accounting period under consideration from the different activities i.e., operating activities, investing activities and financing activities.read more
Skills RequiredNo special skills required.Professional degree in accounts and analytical skills for interpretation;
ComplexityLevel of complexity is lowComparatively high level of complexity
Financial DecisionsIt cannot be made based on book-keeping.Decisions can be made on the accountant’s records.
Sub-Categories
  • Management
  • Financial
  • Cost
  • HR
  • Responsibility
Management RoleGenerally, no role is played in the functioning of a bookkeeper.Management plays an active role since information is required for future decisions.

Activities

Though on many occasions, the terms of bookkeeping and accounting are used interchangeably, the activities conducted by them have their own set of differences, which we shall analyze. The activities of book-keeping consist of:

  • Preparation and sending of invoices to vendors and customers
  • Recording of payments from the consumers
  • Record, Processing, and payment of invoices from suppliers
  • Recording and monitoring of inventory changes
  • Processing payroll and petty-cash transactions
  • Categorizing of credit card and other related expenses
  • Monitoring of late payment and accordingly sending reminders to the impacted parties

The accountants require a higher level and specialized tasks that generally require the services of a CPA (Certified Public Accountant) or by multiple Non-certified accountants with oversight of a CPA. Some of the functions undertaken involve:

The hiring of an individual to conduct these activities could have conflicting views. Many times, small businesses may have the book-keeping tasks completed in an unprofessional manner forcing the CPA to spend more time catching up these activities before progressing ahead. It is also preferred to have in-house bookkeepers who are professionally trained, giving the comfort level to the accountants.

For reducing the costs and maximizing the effectiveness, the firm must make sure they are using the same standardized methods and best practices. They should also be encouraged to communicate regularly and clearly. They should be made to work as a team instead of creating any barriers.

Conclusion

Ensuring the financial records are correctly organized, and finances are balanced out by the bookkeeper coupled with smart financial strategy and timely tax filing of the accountant, directly contributes to the long-term success of every business.

Certain business owners manage their finances on their own. In contrast, others may opt to hire a professional so that they can focus on sections of the business they are interested in. Either of the options will help in their business to grow. Additionally, with the advent of technology, multiple softwares are getting updated for executing the tasks automatically. This aspect will change the definition and requirements with passing time, and hence one is required to be updated with the same.

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This has been a guide to bookkeeper vs. accountant. Here we discuss the top differences between bookkeeper and accountant with infographics and comparison table. You may also have a look at the following articles for gaining further knowledge in Basic Accounting –

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