01/17/2023
Hello everyone! Now that I've shared the 5 benefits of outsourcing the bookkeeping for your business, I will be switching things up.
Today, I will focus on the difference between a bookkeeper and an accountant.
Although bookkeeping is the bulk of the accounting cycle, there are still factors that separate the two roles.
First, let's define the word "bookkeeping". Bookkeeping is the process of tracking and organizing a business's daily transactions from the moment it starts up until the very last second of business. This is done by categorizing each transaction into the proper accounts such as cash, accounts receivable, accounts payable, expenses, etc.
A bookkeeper's responsibility is to ensure these transactions are being properly categorized. Basic bookkeeping services include recording daily transactions, reconciling the bank account(s) every month, providing financial reports, and closing out the books at the end of the period. However, bookkeepers can also provide services such as payroll, paying bills for the business, sending/creating invoices for customers/clients, and paying quarterly taxes.
Now, let's define "accounting". Although it is similar to bookkeeping, accounting is an in-depth process of handling a business's financials. This process involves summarizing, analyzing, and interpreting financial information. In other words, this is the bigger picture of your business in terms of its health and whether your business is at a gain or a loss.
An accountant uses the reports provided by the bookkeeper to help business owners make better decisions. Other responsibilities include overseeing the bookkeeper to ensure the books are being kept accurately, managing the bookkeeping process and correcting errors when needed, providing financial statements after adjustments have been made, and preparing and filing tax returns.
It's important to remember that an accountant can also be a bookkeeper but not vice-versa. However, without the bookkeeping process, the accounting process would be nonexistent.
