We bet that when most people think about bookkeeping and accounting, they may not realize that these two jobs are quite different in their purpose and function. The truth is, there are some big differences when it comes to bookkeepers vs accountants. That being said, one thing they have in common is they're an incredibly valuable asset to any business!
It's true—each one has a unique and important place in your small business. But now, let's break down some of their regular duties to give you a better idea of how their roles differ.
A bookkeeper is responsible for consistently recording daily transactions. As such, the role of a bookkeeper is crucial in a small business for making sure all financial transactions are recorded properly.
These transactions typically involve the incoming and outgoing of money, including payroll, producing invoices, recording sales, debits and credits, and the like.
Another way to say it? Bookkeepers keep track of where all of your money goes. This is a big part of the work they do each day. As such, it's a task that takes a lot off your plate as a business owner once you outsource it.
Your bank account only tells you so much. Reports like a profit/loss statement and balance sheet give you a true picture of how your business is doing. Your bookkeeper can ensure your financial reports are up to date, so you always have the information you need when you need it.
(This post may be about bookkeepers vs accounts, but in this post, you can learn about CPAs vs enrolled agents.)
Please, don’t do your own payroll! The costs associated with doing it wrong are not worth it. Trust us – we have stories. Let a professional bookkeeper handle your payroll for you.
(Are you unsure how much you should be paying or withholding on your employees' paychecks? Take a look at this post for some guidance.)
This includes things like keeping up with due dates, amounts, late payments, and more. These are some of the other important things a bookkeeper can handle for you.
Another important part of bookkeeping is keeping and maintaining a ledger. This is a document, either on paper or in a computer spreadsheet or software. The bookkeeper records all transactions. The size and scope of the business determine the complexity of the bookkeeping system your business will need.
Some of these transactions may require supporting paperwork and are identified by the IRS. You can view a list of those requirements here.
In contrast to bookkeepers whose positions consist mostly of recording and keeping track of objective transactions, accountants are more subjective in their daily duties. The accounting process is a higher-level process than bookkeeping and requires more analysis of the financials, including preparing financial statements, analyzing operations costs and completing tax returns.
(Did you know Two Roads offers several tax services? Learn more about them, including year-round tax preparation, here.)
Often, accountants work to bring an understanding of the broad financial picture for the business owner. The result is a complete understanding of profitability and cash flow in the business.
At Two Roads, we specialize in excellent bookkeeping. Please don’t hesitate to contact us if we can help you with your bookkeeping needs. We make life simple.
This post about bookkeepers vs accountants was first published in 2014, but it was updated in 2021 just for you.