Bookkeepers vs. Accountants - 7 Key Differences

Most people are hard-pressed to differentiate between bookkeeping and accounting, especially those who come from a non-commerce background. Many times, accountants are juxtaposed with bookkeepers, whereas ideally the bookkeepers' work is the first step in the whole accounting process.

At the same time, bookkeepers and accountants are both relevant when it comes to accurately communicating the financial activity, overall performance, and the existing financial condition of a business entity. Today, the important role played by bookkeepers and accountants in every business organization has resulted in an increased demand for accounting and bookkeeping jobs worldwide. Because of this high demand, both accountants and bookkeepers manage to benefit from professional, important, and rewarding professions.

Main Functions: Bookkeeper vs. Accountant

Bookkeeping is the process of recording transactions on a daily basis in a consistent and honest manner. It is a key component to building a strong business, and includes the following major functions to be performed by the Bookkeepers -

• Recording financial transactions daily
• Processing invoices, payments, receipts, general ledgers, etc.
• Accurately posting credits and debits daily
• Completing payroll related work
• Preparing financial statements
• Reconciling multiple accounts and creating reconciliation reports
• Managing AR and AP operations
• Calculating GST
• Lodging and preparing BAS

An Accountant's work although overlaps many of the above mentioned areas of expertise, still remains analytical and advisory in nature. An accountant can not only help in performing regular accounting tasks, but, based on the analysis of past performance, can also offer financial projections for your business and advise you on future financial elements that can affect your business. Services offered by Accountants include -

• Taxation planning and advise
• Business establishment assistance
• Account auditing
• Corporate financial reporting and compliance
• Advising on superannuation funds
• Financial management advise
• Setting up general ledgers
• Designing record keeping, archiving, and document destruction systems
• Creating budgets

Key Differences between Accountants and Bookkeepers

Some of the major points of difference between bookkeepers and accountants include the following -

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How Do Businesses Figure Out Who They Need?

A conversation involving an accountant vs. bookkeeper cannot be easily solved, as most businesses are unsure of whom they actually need. There are many differences between an accountant and bookkeeper, and in certain cases, distinguishing between both as far as certain business operations are concerned is not an easy task. More often than not, it depends on several different factors such as -

• What industry does the company belong to?
• Does the company need to maintain a large number of fixed assets?
• Does the company have a large amount of inventory?
• How many employees do they have working for them?

The more complex an organization, the more important it is to have a good CPA team supporting the bookkeepers, as their work go hand-in-hand. It also ensures there are fewer discrepancies in accounting. At the same time, a CPA is more expensive to be retained permanently as compared to bookkeepers, who on the other hand, are ideal for small businesses that need regular, but non-significant attention to their accounting records.

Overall, bookkeepers are ideal when it comes to managing expenses, but having the periodic support of an accountant ensures someone with an analytical mind keeps an eye on how your business is doing. This not only helps in keeping your records straight, but also acts as a deterrent against financial theft and fraud.

Choose Outsource2india for All Your Accounting and bookkeeping Needs

With over 25 years of experience, O2I's bookkeeping and accounting services have helped a large number of CPAs, accounting firms, small business owners, and entrepreneurs create a more functional finance and accounting strategy.

Our experienced team of bookkeepers and accountants can either act as a virtual extension of your own team, or in certain cases, even provide all the services that you require under one roof. All our accounting functions are exceptionally scalable as per your requirements, and can be helped to manage all your financial needs while you focus on more pressing requirements. Contact us right away and learn more about how our accounting and bookkeeping expertise can add value to your business!