It’s our first blog post on our new website! Thanks for checking us out and make sure and check back often for more exciting posts about the world of bookkeeping! Let’s start with something very basic. What is the difference in a Bookkeeper and an Accountant/CPA? You probably wouldn’t be surprised to learn that this is a super common question in our field. Most of you reading this now are probably glad we are covering this topic because you didn’t know the answer either! So let’s get started!
Often times when I am asked what I do for a living, and I say “I am a bookkeeper,” I get blank stares followed by “Oh, so like an Accountant?” For the majority of the time, I smile and say “yes”. While it’s true that the terms “bookkeeper” and “accountant” can be interchanged to a certain degree, the literal job roles can be significantly different. So let’s focus on that, the job roles.
The term "bookkeeper" is pretty literal: The bookkeeper keeps the books and retains documentation for transactions. A lot of times, a bookkeeper starts as a data-entry clerk and through experience and merit, grows into being the go-to person for a company’s day-to-day financial recording.
In general, a bookkeeper is a person without a college degree in Accounting who performs much of the data entry tasks. This includes entering the bills from vendors, paying bills, processing payroll data, preparing sales invoices, mailing statements to customers, etc. However, an experienced bookkeeper can eventually move into being an accountant through obtaining their degree and certifications.
Now onto an Accountant:
An accountant is likely to have a college degree with a major in Accounting and takes over where the bookkeeper leaves off. The accountant will prepare adjusting entries to record expenses that occurred but are not yet entered by the bookkeeper. (Interest on bank loans since the last loan payment, wages earned by employees that will be processed next week, etc.) Other adjustments to accounts include the calculation and recording of depreciation, establishing allowances for uncollectible accounts, etc. After making the adjusting entries, the accountant prepares the company's financial statements (income statement, balance sheet, statement of cash flows.) The accountant also assists the company's management to understand the financial impact of its past and future decisions.
It’s important to understand though, that a bookkeeper can also assist in these areas, and often does, much like our company. We have the skills and certifications to prepare financial statements, and can help give you advice and provide business analysis. There are simply some areas that accountants or CPAs are more familiar with through their higher levels of education. And it’s for that reason, that many times a bookkeeper and accountant work in tandem, with the bookkeeper operating as a “feet on the ground” professional, promoting a stronger relationship between an accountant and a business owner, much like us at To The Rescue Bookkeeping.
The distinction between accountant and bookkeeper is ever changing as accounting software and other software evolves. That’s why we use the highest quality software and stay up to date on all our certifications! We can help you with any financial need you and your company may have!