2 Differences Between An Accountant And A Bookkeeper

Accounting and bookkeeping have been in existence since the evolution of business; i.e. these services are required to keep track of a business' financial state of affairs - or, in other words - it's "lifeblood." A bookkeeper is trained to make accounting entries as and when they occur on a daily basis. He knows the business' debtor-creditor position, payroll and files tax returns on behalf of his employer. In terms of specialized education, bookkeepers usually have an associate's degree, or learn hands on.

Here are 3 main differences between a bookkeeper and an accountant.

*Bookkeepers For Small and Medium Scale Enterprises: A notable difference between accounting and bookkeeping is that for small and medium scale enterprises (SME), hiring bookkeepers is more cost effective as their fees are lesser than those of CPAs or accountants. Moreover, they are often conversant with the implementation and of customized accounting software, thus ensuring accuracy of accounts maintained.

For SMEs particularly, a bookkeeper can be employed full time or on a contractual basis depending on the nature of the business and volume of transactions. This ensures a more direct interaction between employer and employee, the latter getting to know his employer and the functioning of his company in a more comprehensive and elaborate manner. He then turns out to be a more dependable and a trustworthy advisor who will promptly alert his employer in cases of fraud and embezzlement.

*Specialized Degree Holders: Large businesses and corporations usually call for the recruitment of Certified Public Accountants (CPAs) or accountants. While making a comparative analysis between CPA and
Bookkeeping, it is observed that the former have a specialized professional degree and have had to clear certain professional examinations to get that. They also need to upgrade skills through continuous training in order to have their license renewed. As against bookkeepers who have a general, non-specialized function, CPAs may be specialists in taxation matters, budgeting and funds management.

They need to undergo rigorous training over a longer time period and have to meet certain state-specific requirements to obtain their license. Hence, their fees are higher and they are more expensive to recruit.
A prudent step, however, would be to adopt a policy which combines the skill sets of CPA and bookkeeping. While a bookkeeper will oversee the day-to-day financial position, the CPA could be hired to review at regular intervals the accuracy of the bookkeeper's work.

This will ensure order in your business affairs and prevent financial calamities. The CPA, moreover, could also advise you on complex tax matters and investment options for more lucrative returns.