Updated: 5 days ago
In my experience, most people don't know the difference between these two roles. They have assumed that they are the same or that their duties include anything and everything financially related. I'm going to break down the differences for you. Be sure to read the other Q&A so you learn the difference between a Bookkeeper, an Accountant and what we provide: CFO Consulting.
A Bookkeeper is one who records the financial transactions of a business. They also produce reports for the owner.
Basic Bookkeeping duties would be:
Recording income and expenses into the correct tax categories
Reconciling bank accounts
Invoicing and collecting money
An Accountant interprets, classifies, analyzes, reports and summarizes financial data. They are usually certified and do taxes.
Basic Accountant duties would be:
Analyzing business data
Strategic Planning for growth of business
Providing insight on business
Providing tax advice (usually)
Completing tax returns (usually)
In my experience, the difference is:
I've worked with quite a few Accountants, usually they are CPA's (Certified Public Accountants) which means they do board exams to get certified by the state. It certifies that they have extensive knowledge in the field of finance to provide tax and financial advice. It also gives them more credibility. However, based on my experience, most CPA's are providing advice from a tax perspective. For example, "If you want to increase your deductions before the end of the year, great time to buy a car Mr. Smith."
When you are looking at making business decisions from a money management perspective, then buying a car may not be the right choice for you at that time. Tax purposes is one thing, having money in the account is another.
From my experience, ideally it would benefit you to work with both. A professional who monitors and manages the money on a regular weekly basis and then one who meets with you for overall tax advantages. The first one helps the business get in more control of the finances, identify red flags faster and therefore increase the income faster, if such red flags are handled properly. The second one, helps ensure you are getting all the deductions you can take, provides business strategic advice (mainly from tax perspective) and gets your taxes done accurately.
This way you are handling the business professionally from both angles. I hope this helps increase the understanding between a Bookkeeper and an Accountant.
If you would like to see what the difference is between those two and CFO Consulting, check this out!