We often hear the terms accountant or bookkeeper used interchangeably in the business world. That makes it difficult to understand the differences between the two. When you’re a small business just getting on your feet, you will often receive advice about hiring a bookkeeper or accountant to help you manage the financial side of your business. It’s therefore important that you have a basic understanding of the difference between the 2 so you know what you need for your business.
What is Bookkeeping?
Just as the name would suggest, a bookkeeper is basically in charge of keeping the books of a business by logging information regarding any and all transactions. At its core, bookkeeping is basically a subset of accounting. A bookkeeper spends his or her time organizing, storing and accessing financial information to facilitate the day-to-day operations of a business. They also prepare financial statements, tax returns and other internal reports for business owners and managers.
Often you will see a bookkeeper working for an accountant, keeping records and organizing information that can then be used by an accountant to communicate with a business owner. Bookkeepers do not always have a college degree in accounting and may even have other assigned tasks to complete outside of accounting.
What is Accounting?
When it comes to setting up and designing the bookkeeping system for a business, you need someone who is familiar with the entire process.They can call the shots on how the system should function. This is accounting. Accountants establish the controls needed to ensure the record keeping system is functioning appropriately and that the correct information is being tracked and reported.
Not only do accountants work to set the entire system up. They are also in charge of measuring the financial effects of economic activity as well as reporting on performance. To put it simply, the accountant is the one giving orders while the bookkeeper follows those orders.
Related: How a CPA Can Help You Save Money
Which Do You Need for Your Business?
Small business owners may wonder if they need an accountant or bookkeeper, or both. This entirely depends on your specific business needs. Some of the most common factors in determining your accounting needs include the following:
- Number of Employees
- Size of Business
- Size of Inventory and Fixed Assets
Many professional accounting companies offer both bookkeeping and accounting services that allows for good communication and strong data.
Looking For An Accountant Or Bookkeeper?
Are you in need of an accountant or bookkeeper? Give Hacker Accounting a call to learn more about what we have to offer. Our dedication to professionalism, responsiveness and quality make us a clear choice for any business.