Curious about what sets a bookkeeper apart from an accountant?
Most people think accountants and bookkeepers are one and the same, but there is a big difference between the two professions.
Although they both handle financial documents and can help you manage your finances, they have different organizational roles.
As a business owner, you will likely need both services at some point. Understanding the differences is crucial so you can choose the right professional for your company’s needs.
Let’s take a closer look at the differences between accountants and bookkeepers so you can make an informed decision.
Bookkeeper vs. Accountant
Before we dive into the specifics, let’s look at a high-level view of bookkeeping vs. accounting.
Accountants are responsible for analyzing financial records and ensuring they comply with federal and provincial laws. They also perform financial planning, provide tax advice and represent their clients during audits. The highest level of certification in Canada is the Certified Public Accountant (CPA). To become a CPA, accountants must pass a rigorous exam and meet other requirements.
On the other hand, bookkeepers are responsible for maintaining financial records, which include tracking income and expenses, reconciling bank accounts, processing payroll, and preparing financial statements. To become a bookkeeper, you usually need a certificate or associate’s degree in accounting and many online bookkeeping courses teach the basics. However, bookkeepers typically don’t provide the same level of services as CPAs.
Accountants focus primarily on the bigger financial picture and use their expertise to inform business decisions. Bookkeepers are more focused on the business’s day-to-day operations, such as tracking transactions and preparing financial documents.
Even though accounting and bookkeeping are distinct professions, there is a lot of overlap between the two disciplines. For example, both professionals must understand how to use accounting software and other financial tools. They also need to stay up-to-date on the latest regulations and laws.
What Does an Accountant Do?
If you’re wondering what an accountant does, here’s a brief overview of their responsibilities:
- Analyzing financial data and creating reports to provide insight into the business’s performance
- Advising on financial and tax matters
- Providing guidance for budgeting and forecasting
- Representing their clients during tax audits
- Assisting with estate planning and other financial matters
So, what does this mean for you? If you need help with the bigger picture financial matters, such as creating a budget or filing taxes, an accountant is your best bet. They can also provide valuable advice to help you make informed decisions about your business.
Skills of an Accountant
Successful accountants need a certain set of skills to excel in their profession. Here are a few of the most important ones:
Attention to Detail
The financial industry is exceptionally detail-oriented. Accountants must be meticulous with their work and pay close attention to the numbers.
Analytical Skills
Accountants must be able to analyze financial data and make sense of it. They need to understand the implications of their findings so they can provide sound advice to their clients.
Communication Skills
Accountants must be able to convey their ideas clearly and concisely. They need to explain complex financial concepts to non-experts in an easy-to-understand way.
Overall, accountants understand and manage the business’s financial health. They play an important role in helping businesses make smart decisions that will help them succeed in the long run. If you need assistance with your financial matters, an accountant can be a great asset on your team.
What Does a Bookkeeper Do?
So, is a bookkeeper an accountant? No.
Bookkeepers are responsible for managing the day-to-day finances of a business. Here are some of the tasks they typically handle:
- Reconciling bank accounts
- Processing payroll
- Coding and entering transactions into the accounting software
- Preparing financial statements
- Tracking income and expenses
Bookkeepers may also prepare invoices, manage accounts receivable and accounts payable, and complete other administrative duties. The role of a bookkeeper is different from an accountant in that they primarily focus on the daily operations of the business. However, they must still be knowledgeable about accounting principles and best practices.
Skills of a Bookkeeper
Bookkeepers need to possess several skills in order to be successful. Here are the most important ones:
Organizational Skills
Bookkeepers must be very organized and able to multitask. They need to keep track of multiple accounts and transactions and manage their own time effectively.
Attention to Detail
Just like accountants, bookkeepers must pay close attention to detail. They must ensure that all transactions are entered correctly into the accounting software.
Computer Skills
Bookkeepers must be tech-savvy to use accounting software, spreadsheets, and other financial tools effectively.
Bookkeepers maintain accurate financial transaction records and provide the business with important financial information. They play a key role in ensuring the business is financially healthy and compliant with all applicable regulations and laws.
If you need assistance managing your day-to-day finances, a bookkeeper can be an invaluable asset to your team. With their help, you can ensure that your business runs smoothly and on the right track. Having an experienced bookkeeper on board can make all the difference in the long-term success of your business.
Business Relationships with Accountants and Bookkeepers
Since bookkeepers are typically more involved in the business’s ongoing operations, they often work more closely with department heads and other employees.
On the other hand, accountants are more focused on the big picture and often work with business owners to develop strategies and make financial decisions. Tax season is usually the busiest time of year for accountants and bookkeepers, as they work together to ensure that all financial records are accurate and up to date before filing taxes.
Although it is possible to hire a bookkeeper as a contractor, some businesses prefer to hire an in-house staff member. This allows the bookkeeper to get familiar with the business’s financial systems and build relationships with the other staff members. Accountants usually work as consultants and are not typically employed by the business.
The Benefits of Hiring Accountants and Bookkeepers
Now that you know the basic differences between accountants and bookkeepers, let’s look at why you might need to hire one or the other.
Tax Deductions
Accountants are invaluable for their expertise in tax laws and regulations. They can help you find deductions, apply for credits and ensure that your business complies with all applicable laws. Accountants also offer financial planning services to help you save money on taxes and make informed investment decisions.
Accurate Financial Records
Bookkeepers are beneficial because they provide a way to keep accurate records of financial transactions. This helps business owners stay organized and provides a solid foundation for making informed financial decisions. Bookkeepers also handle payroll processing and help you remain compliant with local labor regulations.
Compliance
Both accountants and bookkeepers help ensure that your business complies with Canadian law. They can guide you on how to structure your payroll system and ensure you’re meeting all your obligations. In addition, they can advise you on whether a specific expense qualifies for a tax deduction.
Investment Advisory Services
Accountants can provide investment advice and help you decide where to invest your money. They also know to evaluate new business opportunities and investments. This can be especially helpful for business owners unfamiliar with the investment process.
Before you make a significant business decision, it can help to get an outside opinion from a financial professional. Instead of making decisions based on guesswork, your family’s views, or your gut feeling, it is important to consider sound financial advice. We are all for trusting your gut, but it’s always better to be safe than sorry when it comes to money. Get a second opinion before you make a significant financial decision.
Having an experienced accountant on your side can give you the peace of mind that comes with knowing that your finances are in order. With their help, you can make more informed decisions about how to manage and grow your business. Think of them as your financial advisors, helping you make the best decisions for your business.
Whether you’re just starting or have been running a business for years, having a knowledgeable finance team can help you set and reach your goals. They are also great resources for understanding the complexities of your taxes and can help you avoid costly mistakes. In the end, having a team of accountants and bookkeepers on your side will ensure that your business runs as efficiently and profitably as possible.
Online Solutions For Accounting and Bookkeeping
Online accounting and bookkeeping services are often called cloud-based accounting and bookkeeping. These services make it easier for businesses to manage their finances.
Cloud-based solutions also provide more control over data and allow you to access financial reports from any device with an internet connection. This can help speed up the bookkeeping process and make it easier for businesses to comply with tax regulations.
With the help of a cloud-based solution, businesses can save time and money by eliminating manual data entry, tracking expenses, and managing payroll.
At Pivot Advantage Accounting and Advisory Inc., we fully offer online accounting and bookkeeping solutions. Our cloud-based accounting services provide businesses with a secure and efficient way to keep track of their finances. QuickBooks Online™ is our preferred software for online bookkeeping because of its ease of use and wide range of features. It offers integrations that make it easy to manage invoices, collect payments, pay taxes, and more. Our online accountants will help you maximize efficiency and ROI.
Online solutions are the future of accounting, and we are proud to offer our clients the latest technology.
Bookkeeper vs. Accountant: Which Should You Hire?
When searching for the right financial professional, you’ll want to ensure they have the experience and qualifications needed to help your business. Here are a few tips to help you:
Look For Industry-Specific Experience
Accountants and bookkeepers come from all backgrounds, so it’s important to find someone with experience in the same industry as your business. If, for example, you own a restaurant, look for someone who understands the nuances of running a restaurant. The same applies to any other industry.
Check Their Credentials
Ensure the financial professional you hire is appropriately certified. You can usually find this information on the professional’s website or by checking with the CPA directory. It’s also important to make sure that they have up-to-date knowledge of the latest regulations and trends in the finance industry.
Get Recommendations
It’s also a good idea to ask for recommendations from other business owners who have used the services of a financial professional. Word-of-mouth referrals are often the best way to find a reputable accountant or bookkeeper.
Assess Their Communication Skills
Another tip for finding the right accountant or bookkeeper is ensuring they have the right communication skills. A financial professional should be able to explain financial concepts clearly and in a way you can understand. Be sure to ask questions and make sure they are comfortable answering them.
Ask For References
Any reputable financial professional should be willing to provide references from past clients. These references can be a great way to get an idea of how financial professionals operate and whether they are the right fit for your business. You could meet many qualified professionals, but that doesn’t necessarily mean they’re the right fit for your business.
Remember that hiring a financial professional is important and should not be taken lightly. Take the time to find someone with the experience and qualifications to help your busine
The Bottom Line
When it comes to managing finances, there are many benefits to hiring both accountants and bookkeepers. Accountants provide invaluable tax advice and financial planning services, while bookkeepers keep financial records organized and up-to-date.
Understanding the differences between these two professions can help you decide which professional is best suited for your business’s needs. Having an experienced accountant and bookkeeper on board can help you manage your finances efficiently and improve your bottom line.
By outsourcing financial tasks to experienced professionals, you can focus on what you do best: growing your business!
Looking For a Vancouver-Based Accounting Firm With a Track Record of Success?
Look no further! At Pivot Advantage Accounting and Advisory Inc., we understand the importance of having someone knowledgeable and experienced in managing your finances.
Our Vancouver accountants are certified to serve clients in Vancouver and all across Canada. From tax compliance to payroll services, our Vancouver CPAs have the expertise to help you manage your finances and increase your profits. If you’re looking for an accountant in Vancouver, we’re the ones to talk to!
At our accounting firm, we provide upfront pricing—no hourly fees. No surprises and our pricing is 100 percent transparent from the get-go. We also offer unlimited support and real-time data so our clients can understand their financial situation and make more informed decisions.
Contact us today to learn how we can improve the financial health of your business. We look forward to helping your company thrive!