Bookkeeper Vs Accountant – Bookkeeping Vs Accounting
Bookkeeper Vs Accountant as well as bookkeeping vs accounting have distinct differences. Discover the differences & why have both is necessary for success.
Understanding the Roles within Your Financial Team
You’ve seen the words CPA and bookkeeper used a lot, sometimes interchangeably. Maybe it’s been a source of confusion for you in your hunt for back office support for your contracting company. However a bookkeeper vs accountant has distinctly different rolls. Bookkeeping vs accounting are two different animals.
We want to clear up the definitions of each so you can look for the help you need that is tailored to the specific needs of your contracting company.
To the ordinary person, a CPA is a bookkeeper and a bookkeeper is a CPA. In the financial industry, the definition of the two roles, although complementary to one another, are quite different. Each has their own area of expertise. A CPA (certified public accountant) specializes in the overall financial strategy of a business, and focuses on larger high-level initiatives such as tax preparation or planning. A bookkeeper specializes in the day to day financials of a company, recording debits and credits and other business activity in the general ledger.
Below is an overview of the contributions these two roles may make to a typical small contracting company. This list is not all-inclusive, although it can be assumed that most CPAs and bookkeepers stick closely to the skill sets listed below.
Bookkeepers:
- Record financial transactions
- Issue invoices to customers
- Record bills from suppliers
- Receive payments on invoices
- Make payments on bills
- Process payroll
- Produce annual 1099s
- Maintain and reconcile checking accounts
- Maintain and reconcile credit card accounts
- Run the general ledger
- Process petty cash transactions
- Create year-end reports for the CPA
CPAs:
- Prepare audited financial statements
- Plan for taxes and compile returns
- Analyze cost of operations
- Create budgets
- Offer financial forecasting
- Manage or advise high-level financial strategy
So as you can see, with the bookkeeper vs accountant, the duties and expertise of these two roles differ widely. You would not want to hire a CPA to keep your day-to-day books. Likewise, come tax-time, you shouldn’t expect that your bookkeeper is qualified to file your taxes for you. They also won’t be delivering higher-level strategy throughout the year.
In a dream world, every business would have a trusted financial team consisting of both a bookkeeper and a CPA. Too often a company in its early years ends up absorbing one or both of these roles as they struggle to keep momentum while controlling costs. Because of this, the majority of successful businesses outsource these tasks. Capable third parties can manage their bookkeeping, tax filing, and financial planning.
Are you ready to outsource your bookkeeping? We’re here to help!
Keeping your books in-house for now? Be sure to read Beginner’s Guide to Bookkeeping!
For an open forum on all things contracting, head over to Contractor Talk.
