What’s the Difference Between an Professional Accountant and a Bookkeeper?

May 24th, 2013 by

When you’re starting a small business or considering hiring an accountant for your current company, you may be curious about the difference between professional accountants and bookkeepers. If you look at pop-culture use, you might think they’re interchangeable. However, accountants and bookkeepers actually perform separate (and important!) roles. Here’s a quick guide to help you determine if you need a bookkeeper, an accountant or even both.

What does a bookkeeper do?

Bookkeepers are likely what you think of when you think “accountant”. A bookkeeper is responsible for tracking all the day-to-day expenses of their clients. Bookkeepers are the ones who write down every penny that comes in and goes out, and makes sure that all the books are accurate. They need to be extremely detail-oriented in order to ensure that accurate records are kept.

Of course, not all bookkeeping is the same. Some bookkeepers are advisors who keep track of data entry done by other employees, while others may be responsible for entering the data themselves. If you’ve ever spent an evening entering data into a computer to tally it up (or hand it off to an accountant), then you have some experience with bookkeeping.

What does a professional accountant do?

Professional accountants, on the other hand, take the data that the bookkeepers collect and turn it into useful, actionable information. Accountants are “big-picture” people – they’re the ones who create reports with the bits and pieces of data and turn it into reports and information for business owners and other clients. They may also work with the bookkeeper to determine how to handle specific transactions that the business may face regularly.

Accountants are able to create sophisticated reports that can help a company’s management determine best next steps. For example, financial forecasting may help management choose between two scenarios. Cash flow analyses, financial statements and forensic accounting can all be invaluable to small business owners.

Hiring a professional accountant

While bookkeeping can often be done in-house by a detail-oriented employee or the owner, accounting expertise may require an outside firm. Although some companies hire internal accountants, it can often make more sense for small businesses to contract an external accounting firm in order to ensure that they can get the information they need.
You might wish to hire a bookkeeper as well, but most small business owners get maximum value from bringing in an accountant or accounting firm. That’s because they have specialized skills to prepare reports and forecasts that can be important for making business decisions.

Accounting and bookkeeping aren’t just about taxes. When you’re operating a small business, having accurate information and reports about your financial situation is incredibly important. If you’ve been thinking about hiring an accountant, chances are, you’re ready for one. Before you contract a company, make sure you know what an accounting firm can do for your company.