What is the difference between an Accountant and a Bookkeeper?

In my work with small businesses and entrepreneurs I am often asked to explain what work is best done by a bookkeeper, and when do you need an accountant

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This can be a little bit confusing! Think of it as if you're going to the doctor, you visit a surgeon or a General practitioner or an ear nose and throat specialist depending upon what you need.  As accountants and bookkeepers we also specialize in different things. It can help to know what an accountant or a bookkeeper typically does so you can make sure you're reaching out for the right help.

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Here's a quick breakdown:

Bookkeeper:

• Maintains day-to-day financial records
• Records transactions and reconciles accounts
• Categorizes transactions for clear reports
• Generates regular financial reports for business use and tax calculations

Accountant:

• Offers a higher-level view and financial analysis
• Provides tax planning and compliance advice
• Assists with overall financial strategy and decision-making
• Conducts audits or review engagements if needed

Both play crucial, and sometimes overlapping roles, but accountants typically offer a broader range of services. Depending on your business's size and complexity, you may need both. If you have questions or need assistance, feel free to reach out!

Hi Kerry here from My Cloud Bookkeeping. In my work with small businesses and entrepreneurs I am often asked  what is the difference between an accountant and a bookkeeper. This can be a little bit confusing! Think of it as if you're going to the doctor, you visit a surgeon or a General practitioner or an ear nose and throat specialist depending upon what you need.  As accountants and bookkeepers we also specialize in different things. It can help to know what an accountant or a bookkeeper typically does so you can make sure you're reaching out for the right help.

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Generally, a bookkeeper helps you to maintain your financial records on a day-to-day basis. Firstly, they're going to be recording your transactions. They'll be helping you to ensure you capture all your sales and expenses, probably asking you for your receipts for any credit card expenses that you have, and getting all of that data accurately entered into your accounting system.

The second thing they'll be doing is reconciling your accounts on a regular basis.  Your bookkeeper will be comparing your accounting records to those in the bank and this is how they make sure that everything has been entered.

Number 3 – your bookkeeper will categorize your transactions to ensure that sales are allocated to the correct areas that expenses are put into useful pots or categories so that when you're looking at your reports they make sense.

And the fourth thing your bookkeeper will do for you is generate regular financial reports so that you then can look at and use the information to run your business and  so that your accountant will have something to use at the end of the year to calculate your taxes.

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That brings us to the accountant. Typically your accountant will take a higher level view of what's going on. They'll be looking at how they can help you to make decisions about the direction of your business and they'll be giving you tax advice.

So, the number one thing I would say accountants do is financial analysis.  Accountants look at the financial statements that have been prepared by your bookkeeper and assist you with making decisions on business performance trends, areas for improvement, profitability, and cost saving measures.

Secondly your accountant will work with you on tax planning and compliance. Accountants understand the tax regulations and typically they have a view of your entire family situation so they can help you to decide on things like should you be paying yourself with dividends or a salary or which family members should be employed in your organization.

Thirdly they'll help you with overall financial strategy. Things such as budgeting and planning, whether or not you want to grow and expand, or perhaps look to sell your business. Those types of decisions that are outside the scope of day to day activities.

Finally, an accountant would be somebody who would conduct an audit or a review engagement. Now, not all accountants are registered or able to carry out these types of engagements but if you do need an audit or a review done it would be an accountant you would reach out to.

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Now that said, I know some amazing bookkeepers who also provide tax services and there are accountants who have a bookkeeping division within their organization so there is overlap between accountants and bookkeepers.  However on the whole, your accountants are providing a broader range of services including financial analysis, tax planning, strategic advice, and in some cases, auditing.  You may see your accountant only once a year.  Whereas your bookkeeper will be focusing on recording and organizing the financial transactions, and ensuring that they're accurate on a regular basis.  Depending on the size and complexity of your business you may need the services of both a bookkeeper and an accountant.  If you find a good bookkeeper, hold on to them! They are worth their weight in gold.  And if you can't find a good bookkeeper, reach out and I can probably help you get things set up so hopefully we can automate them and you can manage them yourself.

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If you are using QuickBooks Online and you haven’t come across me before, hi! I have a series of videos helping business owners and entrepreneurs.  If you don’t, and that’s something that interests you, there's a link below that will help you to choose the best plan for your business, and make sure you get the best deal that’s on offer at the moment. Hopefully that has helped to clarify when you need to reach out for a bookkeeper or an accountant. Let me know if you have any further questions in the comments below, and be sure to click like, and subscribe to my channel.

Cheers

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