Bookkeeping vs. Accounting: What the Differences Mean For Your Small Business

Knowing the differences between a bookkeeper and an accountant is important to organize your small business’ finances. However, it's common for these two roles to be used interchangeably. Both professions are involved in a business’ finances, but they handle these records differently.

Understanding The Role of a Bookkeeper vs Accountant

A bookkeeper handles the ongoing financial records and transactions of a business. This data is then stored within the company’s general ledger account. A bookkeeper will process information like the business’ payables, receivables, payroll, sales and purchases. A bookkeeper needs to be comfortable using an accounting software, like QuickBooks, as well as be accurate and persistent in recording and entering data.

An accountant analyzes the data provided by the bookkeeper to prepare detailed financial statements and tax reports for the company. While an accountant is capable of performing bookkeeping duties, this role usually supervises the bookkeeper instead. An accountant can also be involved in creating the company’s budget alongside the company’s management and owners. Qualifications include receiving a four-year bachelor’s degree in accounting, as well as being organized, analytical and comfortable with math and technology.

What is the difference between bookkeeping and accounting?

These roles are similar in that they both work with a company’s finances and transactions to generate reports based on the data. Additionally, they both need a basic foundation of accounting knowledge.

However, the difference between bookkeeping and accounting certifications is the required coursework. An accountant needs a bachelor’s degree in accounting, while a bookkeeper can take a course to develop a basic understanding of accounting to be qualified. In simple terms, a bookkeeper records the company’s financial transactions, and an accountant is qualified to handle the entire accounting process.

Why You Should Hire an Accountant for Your Small Business

If you’re seeking help with your small business accounting, you need an accountant to take care of your books so that you can focus on being a business owner. Not only can you hire an accountant for taxes, but also to generate an income statement and balance sheet, reconcile your bank account, and clean up your general ledger.

Additionally, a good accountant should schedule regular consultations with you, at least each month or once every month, to interpret and utilize the financial data processed. If your business is too small to establish an accounting department, you can hire an accountant from an outside firm that specializes in small business accounting.

Go One Step Further – Hire A Small Business CPA

A Certified Public Accountant (CPA) is an accountant who has completed further education, passed certain examinations, and met all other licensing requirements to receive a state’s certification. The license regulations for a CPA may slightly differ by state, but all CPAs need to pass the Uniform Certified Public Accountant Examination. Additionally, a CPA needs to renew his/her certification every two years.

While a CPA can perform the duties of an accountant as listed above, a CPA’s responsibilities go further than that. A CPA can prepare tax returns for individuals and businesses and sign tax returns. A CPA can also represent a taxpayer before the IRS in the case of an audit or similar situations.

Do you need a CPA? Contact Watson CPA today!

The benefit of hiring a small business CPA is that you only have one person to communicate with to discuss and sort out your business’ finances and transactions. Watson CPA offers all of the services of a bookkeeper, accountant and CPA. Small business owners in Carmel, Westfield and the surrounding Indianapolis area have trusted Watson CPA to take care of their business' accounting duties.

Get your free consultation with Watson CPA today to get your small business on track.

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