Keeping track of your financial data is a vital part of having a successful business. Whether it is completed daily, weekly, or monthly, all transactions made by your business need to be recorded properly. As such, having an accountant or a bookkeeper to keep accurate data of your finances can help your business make sound decisions and ensure a healthy cash flow.
Accounting and bookkeeping share the same goals. As a business owner, it is important to know the difference between the two.
Accountants vs. Bookkeepers
Accounting is a high-level and subjective process aimed to provide insights, while Bookkeeping is more transactional and administrative that is focused on compiling financial records for the company.
A bookkeeper’s main task is to record transactions consistently by maintaining a general ledger. His work is an important component in staying on top of every business’ finances. A general ledger is where companies keep records of the company’s finances from sales and expense receipts.
Other functions that bookkeepers oversee:
Recording financial transactions
Posting debits and credits
Maintaining and balancing subsidiaries, general ledgers, and historical accounts
An accountant analyzes the financial information compiled by the bookkeeper to provide insights and financial models to business owners. Accountants provide businesses a bigger picture of their profitability and cash flow to assist with strategic tax planning, financial forecasting, and tax filing.
An accountant’s job includes:
Preparing and adjusting entries
Preparing company financial statements
Analyzing costs of operations
Completing income tax returns
Aiding the business owner in understanding the impact of financial decisions
Accountant and Bookkeeper Credentials
Accountants and bookkeepers often do the same type of work, but another key difference between these two is the skills required for each function.
Bookkeepers, unlike accountants, typically aren’t required to have a formal accounting education to handle the books for their employers, but licensing is available. For a Bookkeeper to be successful in their work, one must have keen attention to detail to ensure recording accuracy and knowledge in key financial topics.
Another thing to note is that Bookkeepers can’t call themselves “accountants.” They are also often overseen by an accountant or the business owners.
Bookkeepers aren't required to be licensed or have certifications, but accreditation and licensing are available.
Accountants require a higher-level and specialized certification including a bachelor’s degree in accounting to practice in the field. Accountants are also required to obtain certain licenses, such as passing the Uniform CPA exam and maintaining their accreditation through ongoing education requirements.
A CPA is an accountant with advanced skills who has passed the state's Uniform CPA exam.
Whether you need an accountant, a bookkeeper, or both, it’s crucial to screen your potential employee and see if they’re qualified for the job. Either of these two will surely support and help your business grow. Not sure where to begin? Here at Intelegencia, our financial professionals can help your businesses make better data-driven decisions in addition to the software we offer to execute the tasks automatically.
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