A Closer Look Into Their Roles
While the terms are often used interchangeably, the functions of a bookkeeper versus those of an accountant are distinct. Bookkeepers are typically responsible for keeping detailed records of the financial transactions for a business, while accountants are expected to establish and oversee systems the business can use to monitor its financial status and make strategic decisions. Both bookkeepers and accountants may work as company employees or as specialists, and some outside CPAs will offer the full package of bookkeeping and accounting services.
What Does A Bookkeeper Do?
Bookkeepers perform duties such as tracking the amounts and dates of payments that are owed to a company, issuing invoices, and recording when payments are received. These data entry tasks usually fall under the heading of accounts receivable. Bookkeepers may also keep records of payments the company will owe. Usually this involves reviewing incoming invoices, collecting documentation to ensure the invoices are accurate and making payments—these functions are referred to as accounts payable.
Another common role bookkeepers perform is executing employee payroll, which may include documenting hours worked by hourly employees, keeping records of salaries due to salaried employees, tracking employee benefits earned by both groups, and issuing payroll payments.
Finally, someone must ensure that the business has enough cash on hand to pay the obligations owed by the business during any given time period. In small businesses, this task may be assigned to the bookkeeper. In larger businesses this role is usually played by an accountant.
How Is Accounting Different From Bookkeeping?
Generally, accounting involves a higher level of strategic thinking and planning than bookkeeping. For example, it is usually an accountant who is given the job of setting up the systems a business will use to monitor its financial transactions.
In keeping with these greater responsibilities, accountants are commonly expected to have more education than that required to earn a bookkeeping position. While a bookkeeper may find employment with no formal training, accountants are usually required to earn a degree in accounting. Many also have MBAs and may be certified as CPAs as well.
One of the most important roles for the accountant is creating and presenting reports that enable top executives to make financial decisions for the company. Typical accounting reports include balance statements, profit and loss statements, and cash flow reports. These reports are often derived from the work of bookkeepers, and sometimes include a series of complex adjustments made by the accountant.
In some situations, the accountant is charged with seeking opportunities to use the resources of the firm more efficiently. This often includes streamlining bookkeeping operations so they are not overly time consuming, and may even include regularly reviewing financial transactions to search for ways to cut spending. Some accountants also gain expertise as tax preparation specialists.
Finally, the accountant is expected to ensure that financial records are consistently accurate. In larger organizations, this usually involves overseeing the work of the bookkeeping staff. In almost every case, accountants are expected to implement measures to test the accuracy of bookkeeping records, to monitor the financial progress of the business, and to deter fraud.
Most small businesses, especially those just starting out, benefit from hiring an outside CPA to handle the bookkeeping, accounting, and tax preparation. They have the expertise necessary to guide you during the initial period, and can teach you some of the basics that will help your business succeed. If you are need of bookkeeping services for your small business, call Acosta Tax & Advisory today to set up a free consultation to discuss the details of your business – we offer endless services that can influence the growth of your company for years on end.