Bookkeepers and accountants both play a vital role in the success of your business, but the role they play within your company differs in several ways.
The main difference between bookkeeping and accounting is that bookkeeping mostly deals with recording and organizing financial information.
The main focus of accounting is to interpret and analyze the financial information that has been presented by the bookkeeper.
As stated above, bookkeeping is mainly about recording financial information as transactions occur in your business while accounting deals more with interpreting financial information at the end of an accounting period.
With that said, there are many other tasks that the bookkeeper and accountant are responsible for which will be discussed in detail below.
The main goal of a bookkeeper is to keep a record of all of the money coming in, and going out, of a business.
In other words, it is the responsibility of the bookkeeper to record the daily transactions of a business in a consistent manner for easy interpretation by the accountant.
Important bookkeeping tasks include:
How often these tasks are carried out by the bookkeeper will depend mostly on the size of your business and the number of transactions that occur on a daily basis.
All income and expenses need to be recorded in order to ensure that the financial information used to measure the success of your business is useful and correct.
However, certain business transactions require supporting documents which can be found on the IRS website.
While it is the bookkeeper's job to record, organize, and compile financial data, it is the job of the account to analyze and communicate that financial data to owners and management.
Responsibilities of the the accountant include:
One of the most important responsibilities of the accountant is to analyze the financial statements and communicate the findings to those in charge of the organization.
Analyzing financials is a vital part of understanding the performance of your business.
Without knowing your level of debt compared to your assets, your income over a certain period of time, or the amount of cash you have on hand, it is extremely difficult to gauge the financial health and performance of your company.
An accountant can turn the information collected from the bookkeeper into insightful reports that allow you to better understand the financial state of your organization.
Bookkeepers and accountants may have some overlapping responsibilities but require different levels of expertise, training, and certifications.
One does not necessarily need any specific certification or advanced degree to become a bookkeeper.
In order to be a successful bookkeeper, one must be very detail oriented and have a passion for accuracy.
There are different certifications available for those seeking to become a bookkeeper, such as the American Institute of Professional Bookkeepers (AIPB) and the National Association of Certified Public Bookkeepers (NACPB).
These certifications are not explicitly required in order to be a bookkeeper, however, these programs provide a great framework for those seeking to get their start in the industry as well as those looking to improve their bookkeeping skills.
The requirements needed to call yourself an accountant are much more strict than those needed to call yourself a bookkeeper.
First of all, you will generally need a bachelor’s degree in accounting or the closely related field of finance as a bare minimum requirement to become an accountant.
Further, there are other professional certifications that one can receive to further their accounting career.
The most common certification is the CPA designation, or Certified Public Accountant title.
In order to become a CPA, one must obtain sufficient experience as well as meet certain continuing education requirements. There is also a Uniform Certified Public Accountant exam that all CPA candidates must pass before they can call themselves a Certified Public Accountant.
All of these factors are part of the reason that the cost of an accountant is higher than that of a bookkeeper.
The main duties of a bookkeeper are to record all of the transactions that occur throughout a business and to classify those transactions into specific accounts, called the chart of accounts.
Then at the end of the month the bookkeeper is expected to reconcile all of the business bank accounts and credit cards to ensure that the business records match with what’s actually posted in the bank accounts.
Finally, the bookkeeper is responsible for organizing all the financial information that was collected and preparing that information into reports called financial statements for the accountant to analyze.
The main responsibility of the accountant is to analyze and communicate the financial reports created by the bookkeeper and present that information to the owners and the management team.
Further, it is part of the accountant’s duties to advise all necessary parties on tax implications and help find ways to reduce the company’s tax liabilities.
Noon Bookkeeping is an outsourced bookkeeping and accounting solution for business owners consisting of a team of CPA's and certified, expert bookkeepers ready to help you organize the finances of your business.
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Learn more about how Noon can help you take control of your finances.
Bookkeeping and accounting are a crucial piece of every successful business.
Without organized records and proper financial statement analysis it is impossible to understand the performance of your business and you are at a huge disadvantage compared to your competitors.
Hiring trained experts to handle the accounting and bookkeeping aspects of your business is an investment that will pay dividends for years to come as you will have more time to focus on what you do best as well as gain a better view of your financial position.
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