This increase can be primarily attributed to the education, training and strategic role of an accountant. These are the main differences that set apart a bookkeeper vs accountant. These areas define the roles and functions of bookkeeping vs accounting and show why they’re both essential to the business. As both professions engage in managing finances, a lot of people may confuse a bookkeeper for an accountant, and vice-versa. While they work towards a common goal, bookkeepers and accountants support the business in different ways, and in different stages of the financial process.
Those who work in finance or insurance are typically on the higher end of this pay scale, and retail and healthcare bookkeepers usually have lower earnings. Some accountants spend their workdays assessing financial transactions and records to find areas to cut costs, increase income and improve profit margins. Bureau of Labor Statistics (BLS), bookkeepers can begin a career as a income tax calculator bookkeeping clerk with a high school diploma. There are college courses, leading to certification, that teach popular bookkeeping software. Also, the American Institute of Professional Bookkeepers offers a Certified Bookkeeper (CB) accreditation. Bookkeepers and accountants can learn specialized skills as they progress through their degree programs and gain on-the-job experience.
- It’s important to know how these two jobs differ, as they’re both essential to the success of the business.
- Initially, bookkeepers and accountants take the same foundational accounting courses.
- Yet as mentioned earlier, they serve the business in different stages of the financial process.
This individual usually holds an accounting degree and is registered as a certified public accountant (CPA). To use that title, CPAs must pass the CPA exam—which is a highly valued credential in the accounting industry. Those interested in advanced work in the accounting field can pursue becoming a Certified Public Accountant (CPA), which requires a degree and passing a four-part exam. This designation is required if you plan to produce financial reports for publicly traded companies.
Key Differences Between Bookkeeping and Accounting
Bookkeepers and accountants generally need different degrees and training to begin their careers. Though they both work with financial statements, their daily duties are distinct, and they rely on different software, tools and processes. Guide for a more detailed explanation of the differences between bookkeeping and accounting as well as how to hire an accountant or bookkeeper if needed. Bookkeepers and accountants are both critical for the financial health of a company.
The wage ranges overlap a bit, but the advantage for accountants in the top 10 percent over bookkeepers at that level is more than $57,000 per year. The demand for qualified employees is another area where accounting and bookkeeper careers are very different. According to BLS, the demand for bookkeepers is predicted to fall by 5% between 2021 and 2031 as financial software becomes more advanced. Business owners will probably still have bookkeepers, but fewer employees will be able to manage record-keeping operations. Due to these different responsibilities, bookkeepers and accountants often have different educational backgrounds and qualifications.
- An additional 23,650 highly paid accountants averaged $90,560 working for the federal government.
- While it typically takes 4-6 years to become a Bookkeeper, becoming a Staff Accountant takes usually requires 2-4 years.
- Also, the American Institute of Professional Bookkeepers offers a Certified Bookkeeper (CB) accreditation.
- Bookkeepers also post transactions using journal entries that track all account activities.
- Accountants and bookkeepers work with numbers and financial data all day long.
If you opt to pursue certification through a college or university, check with your chosen school’s admissions office to verify the length of the program. Some programs are asynchronous, meaning you’ll pace yourself throughout the course, and you don’t have to log in at any particular time. A typical bookkeeping certification course takes several weeks to complete. For example, NACPB’s certification course takes 13 weeks, and AIPB’s certification course usually takes six months to complete.
When to hire an online accountant vs an online bookkeeper
But to properly manage your e-commerce business, you need to dive into the differences to know whom to hire. Bookkeeping is a transactional and administrative role that handles the day-to-day tasks of recording financial transactions, including purchases, receipts, sales and payments. Accounting is more subjective, providing business owners with financial insights based on information gleaned from their bookkeeping data. For aspiring finance professionals, the question of bookkeeper vs. accountant is common.
Difference Between Bookkeeper and Accountant
Specializing in a career field can help to set you apart and lead to career stability and longevity. You may also be expected to take on more advisory and analytical roles as bookkeeping becomes more automated. Managing the general ledger is part of your daily responsibilities as a bookkeeper. You may determine if any payments are due, submit them, and record them in the financial ledger. As a bookkeeper, you may also receive client payments and deposit them at your company’s financial institution. Small businesses may prefer to handle their books themselves, but hiring a professional bookkeeper can be helpful.
Every business step requires capital, from transforming an idea into a model to investing in its expansion. As a professional bookkeeper, you would keep track of a company’s financial transactions and record them in the general ledger accounts. Your job as a bookkeeper entails systematically keeping track of an organization’s financial transactions. For the information to be reported as a financial statement, it needs to be identified, accepted, classified, and recorded. Learn more about bookkeeping, how it differs from accounting, the required qualifications, and bookkeeping jobs and salaries. Find out more on bookkeeping accounting skills, how to earn accounting degrees and bookkeeping certifications, getting jobs, salary expectations, and more.
The main differences between a bookkeeper and an accountant
For small businesses, adept cash management is a critical aspect of survival and growth, so it’s wise to work with a financial professional from the start. If you prefer to go it alone, consider starting out with accounting software and keeping your books meticulously up to date. That way, should you need to hire a professional down the line, they will have visibility into the complete financial history of your business.
Knowing the difference between bookkeeping and accounting can be tricky, especially with the interchangeability of the terms and how the duties can overlap. Below, we’ll take a closer look at bookkeeping vs accounting, their key differences, and how working with bookkeepers and accounts can benefit your small business. In 2012, the lowest-paid 10 percent of accountants earned $39,930 or less per year, while bookkeepers in the same tier received $21,610 or less annually, reports the BLS. The top-earning 10 percent of accountants received $111,510 annually or higher, while the top 10 percent of bookkeepers received $54,310 per year or more.
Differences between bookkeeper and staff accountant duties and responsibilities
Accounting also involves reporting these findings to tax collectors and regulators. It’s a process that tells the financial story of your business, including if your business is profitable or if you’re suffering a loss. Bookkeepers and staff accountants have different pay scales, as shown below.
More and more, accountants are being looked to as experts in financial analysis, which can open the door all the way to the executive suite. According to leading labor market analytics firm EMSI, the median annual salary for a bookkeeper is $42,411. Accountants, on the other hand, earn a median annual salary of $73,570, which is a 73% increase compared to a bookkeeper.
While some businesses might employ both a bookkeeper and an accountant, others might have only one person responsible for both roles. However, it is important to keep in mind that while an accountant is qualified to be a bookkeeper, not all bookkeepers are qualified to be accountants. To become certified, you need to pass a four-part examination, show two years of full-time bookkeeping experience or 3,000 hours of freelance or part-time experience, and sign a code of ethics. A few employers offer on-the-job training for bookkeepers by providing internships and placement programs. According to the US Bureau of Labor Statistics (BLS), most bookkeepers can learn the profession’s basics in about six months [3].