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Bookkeeper vs Accountant: What’s the Difference and How They Help Your Business

January 10, 2023 5 min. read

As a business owner, you don’t always have the time and knowledge to record and analyze your company finances, set up payroll, prepare for tax season, or stay on top of overdue invoices.

But which do you need—a bookkeeper or an accountant?

In this guide, we explain the difference between an accountant and a bookkeeper, how each helps you run a more successful service business, and which one you should hire.

Bookkeeper vs accountant comparison chart

What is a bookkeeper? What is an accountant? Where does one role end and the other begin—and which one is right for your business?

Here’s an overview of the difference between a bookkeeper and an accountant. You can also keep scrolling to get more details about each role.

BookkeeperAccountant
Administrative support roleFinancial strategy role
Records and manages business financial transactions (expenses, debits, credits, payroll, accounts payable and receivable)Provides financial planning and business insights based on bookkeeping data
Creates monthly financial statementsReviews and analyzes financial statements
Gathers and provides financial information to the accountant for tax purposesProvides income tax services, including filing, planning, and advisory
Provides insight into short-term income and expense decisionsProvides long-term financial forecasting and strategy
Doesn’t require industry certificationRequires industry certification
Can only provide bookkeeping servicesCan perform both accounting and bookkeeping services
Costs around $45,560/year (USD)Costs around $77,250/year (USD)

What does a bookkeeper do?

A bookkeeper is an administrative support person who handles and records a business’s financial transactions, like expenses, payroll, customer invoices, vendor payments, and more.

Their duties and responsibilities include:

  • Maintaining a general ledger of sales and expenses using accounting software like QuickBooks Online
  • Paying bills and monitoring accounts receivable
  • Managing and posting bank account debits and credits
  • Creating, sending, following up on, and accepting payment for invoices
  • Recommending bookkeeping policies and procedures
  • Maintaining historical records and annual budget
  • Processing and managing payroll
  • Managing monthly bank reconciliations
  • Creating balance sheets, cash flow statements, and income statements

A bookkeeper can help you improve cash flow, make budgeting decisions, and manage your business’s financial health. This is especially valuable if you’re just starting a service business.

READ MORE: Do I need a business bank account?

What does an accountant do?

An accountant strategically looks at the big picture of a business’s financial health instead of the day-to-day. They interpret data, make strategic recommendations, and file income taxes.

Their duties and responsibilities include:

  • Reviewing and analyzing bookkeeping data and other financial statements (e.g., cash flow statements, income statements)
  • Sharing business insights and helping with financial planning
  • Filing, planning for, and advising on business income taxes
  • Forecasting and consulting on long-term financial strategy and operational decisions

An accountant can provide both accounting and bookkeeping services because they’re qualified and certified to do both.

How to hire a bookkeeper or accountant

Find a bookkeeping or accounting professional by googling services near you or asking for referrals from other business owners. You can also follow the steps below:

  • Write a job posting and share it on job boards like Indeed or LinkedIn
  • Meet with the top applicants and ask interview questions
  • Check your candidates’ references and run a background check
  • Make an offer to the candidate who’s the best fit for your needs

Below are the qualifications you should look for in a bookkeeper or accountant:

Bookkeeper qualifications

Bookkeepers don’t need formal training or certification. But they do need to understand finances, which is why some choose to earn a bookkeeping license:

  • American Institute of Professional Bookkeepers (AIPB) licensing requires two years’ work experience, an exam, and ongoing professional development
  • The National Association of Certified Public Bookkeepers (NACPB) offers testing and certification for standard bookkeeping tasks like payroll.

You may also want your bookkeeper to have experience working with similar types of home service businesses, using accounting software, or managing invoices and payments.

Accountant qualifications

Unlike bookkeepers, accountants need certain education before they can provide services. Their resume should include a four-year bachelor’s degree in accounting or finance.

An accountant can also add to their credentials by becoming a certified public accountant (CPA), chartered financial analyst (CFA), or certified internal auditor (CIA).

These certifications mean that the accountant has years of experience, has passed difficult and demanding exams, and keeps up with industry developments and ongoing education.

The accountant you hire should understand the home service industry and your business’s tax needs, including a strong understanding of small business tax deductions.

When to hire a bookkeeper or accountant

Here are some signs that you might need professional help with the financial side of your business:

  • You struggle to keep track of your income and expenses
  • You spend more time balancing your books than you do on the job site
  • You feel stressed and overwhelmed when it’s time to file taxes
  • You’re about to hire more employees or scale your operations

These are normal problems for a growing business. You can lighten the load by hiring a bookkeeper to help with day-to-day finances, an accountant for big-picture financial strategy, or even both.

You can also try hiring a bookkeeper part-time, or hiring an accountant who also does bookkeeping. There are lots of options available—it all depends on what’s right for your business.

READ MORE: Hiring your first employee: when and how to do it successfully

While there’s a difference between accounting and bookkeeping, both types of financial support can help your business grow and thrive.

Work with a bookkeeper or accountant and see how the extra set of hands can save you time, money, and a whole lot of headaches.

Originally published August 2020. Last updated on January 10, 2023.

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