Accounting and bookkeeping are two critical components of every business’s operations. Both roles assist business owners and CEOs in managing budgets, making sound business decisions, and avoid potentially significant concerns such as embezzlement and fraud.

While accounting and bookkeeping have many similarities in their functions, they also have considerable distinctions, leading to the never-ending debate of accountant vs bookkeeper among small business owners. The primary difference between the two is in their definitions.

Bookkeeping is the process of amassing, arranging, storing, and retrieving an entity’s financial information base. It is essential for the day-to-day operations of a business and serves as the basis for financial statements, tax filings, and other necessary reports. Simply put, bookkeeping is the practice of keeping financial records.

Accounting encompasses a broad range of activities than bookkeeping. It is a systematic method of identifying, classifying, measuring, recording, verifying, summarizing, and conveying financial data. For instance, an accountant can generate and analyze reports on a business’s present financial position, which can assist the executive or the owner in making sound business decisions. Other differences between bookkeeping and accounting include the following:

Accountant vs Bookkeeper Objectives

Given that accounting and bookkeeping are classified as distinct processes, it’s only natural that their ultimate goals would differ. A bookkeeper’s principal responsibility is to accurately and logically record all financial transactions. In general, bookkeepers maintain track of a company’s financial transactions chronologically. 

The accountant’s primary objective is to evaluate the business’s financial well-being and communicate this information to key stakeholders. Thus, accountants are not mainly concerned with day-to-day bookkeeping tasks (although necessary). Instead, they essentially do analysis and interpretation of accumulated financial data.

Accountant vs Bookkeeper Scope of Work

Additionally, the two occupations vary in terms of their scope.

Bookkeeping duties include;

1. Repay debts as they come due
2. Create invoices for customers
3. Collect and remit taxes to the government
4. Keep a record of cash receipts.
5. Deposit funds in the bank
6. Consolidate each bank account every month.
7. Reconcile all accounts periodically to guarantee their accuracy and completeness.
8. Maintain Petty cash fund.
9. Oversee an organized accounting filing system
10. Maintaining annual budget
11. Process payroll consistently 
12. Provide administrative and clerical support as needed

Related read: The Best online accounting software for SMEs

Some of the common accounting duties are;

1. Reading and analyzing financial records correctly
2. Ensuring that the business complies with applicable state rules
3. Cash flow management and forecasting 
4. Professional financial guidance to business executives
5. Preparation of tax returns and analysis of strategies to reduce the tax burden
6. Preparation of financial statements
7. Presenting reports to stakeholders
8. Establishing a robust accounting framework to combat fraud and embezzlement
9. Monitoring the bookkeepers’ work

While accounting and bookkeeping duties frequently overlap, both functions are important in any business setting. 

Accountant vs Bookkeeper: Requisite Skills and Qualifications

Generally, bookkeeping positions do not need a specialized skill set or advanced degree. However, bookkeepers should be proficient in basic arithmetic and math, detail-oriented, highly organized, have basic knowledge of accounting and finance, and be meticulous in their job. Having said that, many businesses still look for bookkeepers with some basic qualification in accounting, e.g., part qualification in professional certifications or certification as a bookkeeper.  

For accountants, a bachelor’s degree in accountancy or a closely related discipline, such as finance or internal auditing, is typically required. Certain positions in accounting will require more qualifications, including a master’s degree and professional certification. The most commonly desired professional qualifications include CPA, ACCA, CIMA, and ACA. These are usually preferred by employers because of the in-depth education content and the requirement for individuals to comply with current rules and practices by enrolling in continuing education programs (CPD) and renewing their licenses regularly.

Do You Require an Account or a Bookkeeper?

The decision between a bookkeeper and an accountant is mainly subjective and depends on your business’s demands. You may require both an accountant and a bookkeeper or only one. It is common for small to medium business owners to consult their accountants at the close of the year and work with bookkeepers throughout the year to help with the basic day-to-day accounting tasks. 

The following are some indicators that you may require professional financial assistance:

1. If you have frequent contact with your accountant, it may be time to employ one.
2. If you spend more time maintaining your books than on other elements of your organization, it may be time to engage a bookkeeper.
3. If the business is in its infancy stage, you may hire a bookkeeper only at the close of the financial year. After that, you will need to shift as your firm expands. For example, you can progress from a quarterly bookkeeper to a monthly bookkeeper until you finally hire someone full-time.

Choosing between an accountant vs bookkeeper will mostly depend on the size of your business. Bookkeepers can come in handy for small business owners. They will help you keep you with daily accounting tasks at an affordable rate. In fact, this is a common trend among small and medium business owners who only require the services of an accountant once or twice a year for taxes and financial reports. However, as your business grows, you might need the regular services of an accountant.