Before you outsource your company’s financial services, it’s important to determine whether you need full accounting services or a bookkeeper. The terms may seem similar on the surface, but there are some important differences between the two that will likely affect your decision.
There are four main areas of distinction that separate these two important aspects of financial management.
1. Responsibilities
The scope of bookkeeping duties concerns recording daily financial transactions into a database. Bookkeeping responsibilities can also include setting up and running bookkeeping systems, budgeting, and other administrative duties.
Accounting is less concerned with daily financial transactions and more with long-term financial planning, reports, and analysis. Accounting can also involve creating frameworks to avoid fraud or embezzlement, prevent audits, and ensure that an organization is compliant with tax and other financial obligations.
2. Skills
Both careers require someone with strong mathematical and organizational skills. Written/oral communications skills and comfort with technology are often important as well.
In addition to these skills, an accountant should also have knowledge of, training and/or certification in, and an aptitude for financial planning, banking, and tax regulations.
3. Education
Although a bookkeeper needs knowledge of some accounting principles, there’s often no special degree, license, or certification level necessary. However, many bookkeeping jobs prefer candidates to have an associate degree or higher.
Most accounting jobs require, at minimum, a bachelor’s degree in accounting. Certified public accountants (CPAs) do typically need a four-year degree, licensing, and other certifications.
4. Goals
The main goal of a bookkeeper is to keep accurate, detailed records of a company’s financial transactions. Accountants can perform these duties as well, but their main functions are to provide an overall picture of the financial health of an organization, advise stakeholders of their options, and analyze financial data.
Understanding the distinction between bookkeeping and accounting will help you find an employee or local firm that provides the level of service you need and avoid paying for the services you don’t.