Difference Between an Accountant and a Bookkeeper

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Pratibha Devasenapathy | Aug-04-2020

Introduction

For any business organisation, both bookkeeping and accounting are extremely crucial processes for prolonged sustainability. To simply put, bookkeeping is responsible for recording financial transactions and accounting is responsible for interpreting, classifying, analysing, reporting, and summarizing the financial data.

Bookkeeping and accounting may appear to be the same profession, because both deal with financial data, require basic accounting knowledge, and classify and generate reports using the financial transactions. At the same time, both these processes are inherently different and have their own sets of advantages. Read this article to understand the major differences between bookkeeping and accounting.

What is the difference between an accountant and a bookkeeper?

Bookkeepers and accountants sometimes do the same work. But in general, a bookkeeper’s primary task is to record transactions and keep your financial books updated, while accountants provide consultation, analysis, and are more qualified to advise on tax matters.

Bookkeeping

Accounting

Recording and categorizing financial transactions

Preparing adjusting entries

Posting debits and credits

Preparing financial statements

Producing and sending invoices

Completing income tax returns

Maintaining and balancing subsidiaries, general ledgers, and historical accounts

Financial analysis and strategy

Completing payroll

Tax strategy and tax planning

Recordkeeping

Financial forecasting

Other distinctions between bookkeeping and accounting

Since the qualifications required to handle comprehensive accounting processes make an accountant sort of a supervisor for bookkeepers, he may even become a consultant to bookkeepers who ensure financial process accuracy by seeking his or her review and advice. 

The Certified Public Accountant has more in-depth knowledge and holds expertise into the accounting aspects and qualifies to provide feasible business advice. They give ideas and advice that may call for the modifications of the books to align with cost practical deduction eligibility scenarios.

How bookkeeping and accountant roles are being transformed

Bookkeeping and accounting have been in existence since long and both fields have seen a tremendous amount of change in the way they operate. This trend will continue to evolve over the years. Some of the upcoming trends in the field of accounting and bookkeeping include:

  • Merging bookkeeping and accounting

The line between accounting and bookkeeping is slowly decreasing. It is fascinating to note that with the advent of accounting and bookkeeping software, some parts of accounting are being slowly absorbed into the bookkeeping process. At the same time, bookkeeping software is now capable of generating financial statements which were earlier part of the accounting process.

  • Bookkeeping on its way to becoming obsolete

While most businesses will still need a bookkeeper to update the financial records, bookkeeping will become a lot more than just data entry, balancing bank ledgers, and reconciling bank statements. These functions will slowly decline in the coming years, in fact, may even become obsolete, as most of the tasks will be automated with the help of bookkeeping software.

  • Extending the services

Newer technologies have prompted bookkeepers and accountants to be open to technological advancements and explore emerging software options. It is an opportunity for bookkeepers to support their clients by presenting value-added services such as payroll processing, bank reconciliation, inventory management, outstanding management, etc. with the help of the latest software.

  • Advent of smartphones

More and more businesses are shifting their operations online, especially as smartphones and mobiles are becoming increasingly intuitive and easily available. Business owners want to access data from anywhere in the world on different devices, and accounting and bookkeeping professionals are making sure the duly generated reports are available online for their clients to access at all times.

  • More efficient services

Consulting and advising corporations are taking full advantage of these new technologies and services due to the advancement of the analytical tools, making bookkeeping and tax preparation services more efficient and significantly cheaper.

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