The average person is understandably confused as to what, exactly, the differences are between bookkeepers and accountants. Though these financial professionals perform similar roles, they are not exactly the same. Let’s delve into the nuances of the roles of bookkeepers and accountants to help clarify exactly what each professional does and why their work is so important.
The Main Differences Between a Bookkeeper and an Accountant
There are two primary differences between accountants and bookkeepers. For one, accountants typically interpret financial information. Bookkeepers are tasked with managing that information in an accurate manner so accountants can interpret it as appropriate. Furthermore, accountants are regulated quite extensively. An individual must be certified in order to work as an accountant. Though few are aware of it, everyone has the potential to become a bookkeeper without earning a college degree or certification.
A Closer Look at the Role of Accountants
Accountants use the information managed by bookkeepers for analytical purposes. These professionals analyze information presented to them from bookkeepers to make strategic decisions that steer the course of the business, at least in the context of finances. Accountants interpret the books, setting the stage for important decision-making and also to provide recommendations and develop the business’s financial strategy. As an example, accountants are tasked with establishing a reasonable budget for the business.
The Role of Bookkeepers
Plenty of people believe bookkeepers’ work is primarily centered on taxes. However, bookkeepers are not properly certified to prepare taxes. In fact, bookkeepers cannot even file taxes for businesses or other professionals. Rather, bookkeepers have a narrow focus on maintaining comprehensive and accurate financial information for their employer or for clients of that employer. The bookkeeper’s role is to provide information that can be understood by those who are empowered to make decisions at the business. This professional manages and records the financial details of the company, tracking financial transactions and ensuring records, as well as accounts, are fully complete and accurate.
Rely on a bookkeeper and you will receive an accurate monthly snapshot of your company’s financial picture. The information provided by bookkeepers is a strong indicator of your business’s underlying financial health. These professionals double-check the numbers to ensure the entirety of your organization’s financial data is accurate and all-encompassing. This is the accurate and comprehensive financial information you and your team need to make sound financial decisions and formulate an overarching financial strategy that helps your business reach its true potential.
Bookkeepers reconcile bank accounts for all of a company’s transactions, ensuring there is agreement and balance. These professionals also keep a watchful eye on the money moving into and out of your business, ensuring balances in bank accounts match up with those in accounting software. Bookkeepers also collect information regarding transactions stemming from payroll, payment processing companies, expenses, and so on. Each transaction is identified and properly categorized. The duties of a bookkeeper extend all the way to generating important financial statements for presentation to groups ranging from the IRS to prospective investors and potential business partners.
Why It Makes Sense to Work With a Bookkeeper
If you own or manage a business, you are likely wondering whether your organization can benefit from the assistance of a professional bookkeeper. Indeed, the assistance of a bookkeeper can help your business in several important ways. Rely on a bookkeeper and you will be provided with completely accurate, clear, and comprehensive financial records that are suitable for presentation to prospective investors as well as the tax collectors at the IRS. A bookkeeper can also break down your company’s financial records in layman’s terms you can understand without an MBA. This is the clear, cogent, and plain English explanation of financials and their meaning to your company that you and your colleagues deserve.
An added bonus to relying on a bookkeeper is it frees you up to spend your time at work doing what you thrive at rather than investing your limited time on spreadsheets and other bookkeeping details. Bookkeepers also set the stage for your company’s cash flow to be properly balanced and moved accordingly, providing truly invaluable peace of mind.
Most business owners and managers ponder the question of whether it is possible or even prudent to handle their own books in a DIY (do it yourself) manner rather than relying on a bookkeeper. Though it might be possible to pull off such a feat on your own, your time, effort and energy are limited. Outsource the work to a bookkeeper and you will be liberated to square your focus on growing your company and ultimately boosting your bottom line.
Even if you use accounting software at your business, you can still benefit from the assistance of a bookkeeper. Though accounting software is certainly capable of capturing data, it does not explain the importance of the data or interpret it in any way. Add in the fact that even the most expensive accounting software cannot capture all the necessary data and there is even more reason to rely on bookkeepers. These professionals ensure the entirety of your company’s financial data is in the proper order, setting the stage for an accountant to analyze and interpret it for strategic decision-making.
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