One question we’re frequently asked is “What’s the difference between a bookkeeper and an accountant?” What’s interesting to note is that even those who work in finance often confuse the terms. It, therefore, comes as no surprise that new students are unsure of the difference, too.
The confusion tends to be because the work of the professions overlap; bookkeeping is part of accounting. However, although there is similarities, both roles support businesses in different ways.
Bookkeeping
Bookkeeping is the first step in the accounting process and, as the word suggests, is about ‘keeping the books’. It’s a bookkeeper’s role to keep a full and precise record of the daily financial transactions of a business. The standard responsibilities of a bookkeeper are:
- Completing payroll and producing invoices
- Maintaining and balancing general ledgers (a simple document where a bookkeeper records the amounts from sale and expense receipts, subsidiaries (the accounts outside of the general ledger which provide the detail for the balance reported in a general ledger account), and historical accounts
- Posting debits and credits
- Recording financial transactions
Accounting
An accountant analyses, summarises, interprets and reports on the financial transactions of a business. Accountants build on the information provided by the bookkeeper/manager of a business. It is their job to know how a company is performing financially. Accounting is typically comprised of:
- Aiding the business owner in understanding the impact of financial decisions
- Analysing costs of operations and completing income tax returns
- Recording expenses that have occurred but aren’t yet recorded in the bookkeeping process
- Preparing company financial statements, and much more
In Collaboration
What’s important to note is that not all businesses will have a bookkeeper; some small business owners opt to balance their own books. Whichever option a business owner takes, there’s no denying that investing either their time or money into the financial affairs of their business will only help it grow.
When used in collaboration, the organised and accurately balanced finances supplied by a bookkeeper, combined with a well thought through financial strategy and precise tax filing by an accountant, have a greater impact on the long-term success of a business.
If you’d like to get your teeth stuck into an accounting or bookkeeping course, or would like some help choosing between them, contact Aspiring Accountants today.
