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How does a Bookkeeper differ from an Accountant?

Bookkeepers and Accountants are often getting confused with one another – so how do you tell them apart?

If you were to ask a random person to tell you the difference, we would guess they would have a difficult time identifying which is which, and maybe wouldn’t even know if they were distinctly different roles in the first place!

It’s a pretty common occurrence that someone uses the terms bookkeeper and accountant interchangeably, believing that they’re essentially two names for the same thing. Even though they both deal with certain financial aspects of a business and have the same ultimate goal, they are different professions and deal with different parts of the accounting process.

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Being a small business owner, it’s imperative that you’re able to tell the difference between the two and understand why they are both individually important to helping your business grow.

So, how do Accountants and Bookkeepers differ?

What is a Bookkeeper?

A bookkeeper’s job tends to precede that of the accountant. A bookkeeper makes records of all financial transactions performed by a business on a day-to-day basis. They make these financial records in a general ledger usually through some kind of cloud accounting software, like Quickbooks, and are responsible for keeping accurate, up-to-date books.

Bookkeeping is a mostly administrative task but is a key part in building and maintaining a financially competent business.

What is an Accountant?

Accountants, on the other hand, play a much more subjective role in the accounting process. Accountants use financial information recorded by a bookkeeper to produce financial models based on the performance of the business.

An accountant functions a lot like a financial analyst – they are required to understand and determine the impact of financial decisions made by the owner of the business.

How do their duties differ?

As a bookkeeper is responsible for recording financial transactions, posting in the general ledger is their main duty. They post debits and credits within the ledger to summarise the exchange of money, the depreciation of assets or the accumulation of expenses, as well as various other financial duties.

Accountants look at the records made by bookkeepers and prepare financial statements. They may analyse costs incurred by your business and evaluate ways to reduce these costs. Accountants are also responsible for using revenue and expense accounts to complete income tax assessments.

Do I need a bookkeeper or an accountant?

Bookkeepers and Accountants are as integral to the success of a business as one another. The bookkeeper’s preparation of accurate records alongside the accountant’s analysis of financial data can be a relationship for success.

A business may choose to take these duties on themselves. In which case it’s important to know the proper business practices.

Alternatively, you could hire trained professionals like ours. Then, you can keep your focus on the growth and direction of the business by consulting with bookkeepers and accountants, rather than being one yourself!

Whichever path you take, the roles and duties of accountants and bookkeepers are equally important but quite different. Either way, they are integral to the growth of your business. They can fundamentally help you gain a better understanding of your finances and make more informed business decisions.

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