Let’s throw away the misconception that accounting and bookkeeping are the same things. While both accountants and bookkeepers work to assist with financial management, there are definitely some distinctions between their duties. Before entrusting your business to either an accountant or bookkeeper, it’s important to understand the different aspects of the roles.
What Do Bookkeepers Do Anyway?
Bookkeeping is the recording of daily transactions in a clean and consistent way, and it is a large component to creating a financially successful business. Recordings include the business’ purchases, receipts, sales, and payments. These are typically recorded in a journal, however, certain softwares such as QuickBooks can help with keeping track of the entries.
A bookkeeper’s role includes:
● Recording financial transactions
● Recording debits and credits
● Creating invoices
● Processing and maintaining payroll
Each of the above are recorded in a general ledger, a document where the bookkeeper records the amounts from sale and expense receipts. In bookkeeping terms, this is often referred to as “posting.” The more often a sale is made, the more often the ledger gets “posted.” In the days before computers, the ledger was a simple lined sheet of paper, however, these days, specialized software or computer spreadsheets serve the role.
All transactions should be recorded in an organized ledger, however, some require supporting documents. Check out the IRS website to know which supporting documents are required to align with IRS policies.
So What Do Accountants Do?
The role of an accountant is to verify the data entered by the bookkeeper and use that data to generate reports. Based on the accountant’s ability to thoroughly analyze your business’ accounts and transactions, he or she often provides financial projections and advice on future financial elements of your business.
An accountant’s basic role is to:
● Prepare entries not yet recorded in the bookkeeping process
● Manage company financial statements
● Analyze the company’s costs of operations
● Complete income tax returns
● Taxation and financial management advice
● Auditing
An accountant typically has a four-year degree in accounting, finance, or related field. They are also eligible to acquire professional certifications, for example, to become a Certified Public Accountant (CPA), which requires the accountant to pass the Uniform Certification Public Accountant exam.
The complexity of a bookkeeper’s or accountant’s roles often depends on the size of the business and the number of transactions completed daily. Is a business owner, it’s important to understand the roles of each so you can better assess their credentials when hiring a bookkeeper or accountant. For more information about Resolve Works’ in-depth accounting and bookkeeping services for small businesses, visit our Accounting & Bookkeeping page or contact us.
