Bookkeeper vs Accountant: What Are the Differences?

Author: admin March 30, 2021 6 min read

You can also complete additional certifications to demonstrate your proficiency in advanced subtopics related to bookkeeping. Harold Averkamp (CPA, MBA) has worked as a bookkeeper vs accountant salary university accounting instructor, accountant, and consultant for more than 25 years. In addition, you must be a member of the Association of Certified Fraud Examiners.

Bookkeepers aren’t required to be certified to handle the books for their customers or employer but licensing is available. Both the American Institute of Professional Bookkeepers (AIPB) and the National Association of Certified Public Bookkeepers (NACPB) offer accreditation and licensing to bookkeepers. There are no formal educational requirements to become a bookkeeper, but they must be knowledgeable about financial topics and accounting terms and strive for accuracy. A bookkeeper is not an accountant, nor should they be considered an accountant.

The accounting cycle explained

Instead of graduate degrees, bookkeepers can earn professional certifications that indicate greater ability. These include the certified bookkeeper (CB) designation offered by the American Institute of Professional Bookkeepers. A bookkeeper is likely to be employed at a smaller company or organization and will process a large volume of routine transactions.

Bookkeepers handle the day-to-day tasks of recording financial transactions while accountants provide insight and analysis of that data and generate accounting reports. If you want someone with a higher level of mastery in accounting, consider hiring a certified public accountant. CPAs are accountants who have completed a higher level of education and have passed the CPA exam.

Career Path for Bookkeeper

Both bookkeepers and accountants work with your finances, both help make your tax reporting a smooth experience. But to properly manage your e-commerce business, you need to dive into the differences to know whom to https://www.bookstime.com/articles/billable-hours hire. Accounting, tax, bookkeeping and payroll services supply most of the jobs for accountants and bookkeepers. According to the BLS, accountants working in this industry had average annual pay of $75,790 in 2012.

Accountants rely on the accuracy of the financial information provided by the bookkeeper or business owner to do their job well. Their financial analyses and strategies are only as good as the data they’re provided with. In this article, we’ll break down the seven differences between a bookkeeper vs accountant, including their roles, functions, and salary. Regardless of which bookkeeping certification you pursue, we recommend taking a preparatory course. In September 2022, Payscale placed the national U.S. average rate for bookkeepers at $18.46 per hour. Bookkeepers should research local average rates to ensure they price their services competitively.

Bookkeeping vs. Accounting: An Overview

As both professions engage in managing finances, a lot of people may confuse a bookkeeper for an accountant, and vice-versa. While they work towards a common goal, bookkeepers and accountants support the business in different ways, and in different stages of the financial process. An aspiring bookkeeper can enter the profession with a two-year or four-year college degree. Average entry-level salaries approach $38,000 per year, according to Payscale. From this viewpoint, bookkeeping offers an appealing path to an accounting career. Unsurprisingly, the BLS identifies accounting, tax prep, bookkeeping, and payroll services as the industry that employs the most bookkeepers.

• Bureau of Labor Statistics survey of more than 1.1 million accountants.
• Although both can prepare your tax returns, a CPA is more knowledgeable about tax codes and can represent you if you get audited by the IRS.
• Bookkeepers are employees who are in charge of the company’s general ledger.
• Earning your bachelor’s degree in accounting is the first step to a life-long career in the field.

A bookkeeper keeps track of day-to-day business finances, like recording transactions and managing general ledgers. Good bookkeepers are organized, skilled with numbers, and natural problem-solvers. Regardless of the type of bookkeeping a company chooses, recording the day-to-day business financial transactions is an integral part of accounting. The differences between Bookkeepers and Staff Accountants can be seen in a few details. While it typically takes 4-6 years to become a Bookkeeper, becoming a Staff Accountant takes usually requires 2-4 years.

Accounting software allows you and your team to track and manage your business’s expense reports, invoices, inventory and payroll accurately and efficiently. To choose accounting software, start by considering your budget and the extent of your business’s accounting needs. When interviewing for a CPA, look for an accountant who understands tax law and accounting software and has good communication skills. They should understand your industry and the unique needs and requirements of small businesses. AIPB certification requires bookkeepers to have at least two years of full-time work experience and pass a national exam. To maintain the credential, bookkeepers are required to engage in continuing education.

How much you make as a first-year accountant depends mainly on the specific career path you pursue. While accounting can be a lucrative long-term career, most accountants, unlike corporate attorneys or investment bankers, do not command huge salaries during the first few years. There are various career paths for accountants (and some for bookkeepers), from working as a forensic accountant to becoming a financial auditor or an enrolled agent. If you already use specific tools to manage your books, you’ll want to discuss those tools with any bookkeepers or accountants you consider working with to ensure they’re familiar with them.

Some industry experts believe that not enough bookkeepers are emerging to fill available job openings, indicating opportunities for professionals with the right skills. Also, note that the degree-related salaries cover all accounting professionals who hold that degree. However, master’s degrees in accounting are usually designed for professionals in more advanced or technical positions.

Accountants can specialize in government or nonprofit accounting, consulting or freelance, or work in areas like forensic accounting, auditing or education. All these career paths often start with the same type of education, with many accountants pursuing a Bachelor of Science in Accounting degree. It may take some background research to find a suitable bookkeeper because, unlike accountants, they are not required to hold a professional certification. A strong endorsement from a trusted colleague or years of experience are important factors when hiring a bookkeeper. A CIA is an accountant who has been certified in conducting internal audits. To receive this certification, an accountant must pass the required exams and have two years of professional experience.

Bookkeeper vs. Accountant: Comparing Career Paths and Growth Potential

The editorial asserted that not enough new bookkeepers are emerging to replace professionals aging into retirement. There are several telltale signs that you might need to hire professional bookkeeping and accounting help. An enrolled agent (EA) is a tax professional authorized by the United States government. Their job is to advocate and assist taxpayers when they have issues with the Internal Revenue Service. To become one, you have to either have worked at the IRS or pass an EA examination. Bookkeeping is a great starting point if you are interested in the field but not fully committed and want to test the waters.