What’s the Difference Between an Accountant and a Bookkeeper?

When you ask people about bookkeeping and accounting, most are hard pressed to describe a difference between the two. However, while bookkeepers and accountants share common goals, they support your business in different ways.

In fact, there are a number of important differences between an accountant and a bookkeeper. And you need to hire the right one to keep your business on track!

The team from Siragusa has created this guide to explain the differences between accounting and bookkeeping.

Bookkeeper

What Does an Accountant Do?

There is a perception that all accountants do the same thing. However, there are not just differences between a bookkeeper and an accountant, but also between accountants. Just as there are different kinds of doctors, there are different types of accountants who specialise in different areas.

Each different type of accountant works in completely different environments with different skill sets. They solve different problems and there is often very little in common.

The different types of accountants include:

  • Auditors
  • Financial accounting
  • Management accounting
  • Tax accounting
  • Forensic accounting
  • And more

What does Accounting Entail?

Accounting includes recording, sorting, summarising, storing, retrieving and presenting financial transactions that help your business make informed decisions. The process may include:

  • Carrying out analysis of operational costs
  • Prepare and adjust transactions and financial entries
  • Complete tax returns
  • Prepare financial statements
  • Help explain the impact of financial decisions

The main aim of an accountant is to deliver a better understanding a business’ profitability as well as reports on cashflow. They can also help business owners with financial forecasting, tax filing, and strategic tax planning.

Bookkeeper

What Does a Bookkeeper Do?

Bookkeeping often overlaps with accounting. Bookkeeping is basically the foundation of accounting. A bookkeeper focuses on the allocation and processing of transactions. Basically, a bookkeeper does the day-to-day financial work, like raising invoices, paying bills, and processing payroll. They record daily transactions in a consistent manner, which is the key component to building a successful business.

Further, the most important component of bookkeeping, is posting the general ledger. This involves recording the amounts from each sale, as well as expense receipts. The more sales, the more often the ledger is posted.

Generally, your bookkeeper will be the person who assists you with ongoing financial records and transactions that keeps your business running smoothly.

What Bookkeeping Entails

Bookkeeping is the process of recording financial transactions including purchases, sales, payments, and receipts for an individual or business. As a result, bookkeeping comprises:

  • Posting debts and credits
  • Producing invoices
  • Recording financial transactions
  • Completing payroll
  • Maintain and balance subsidiaries, historical accounts, and general ledgers
  • Calculating GST
  • Design, establish and review accounting systems
  • Preparing and lodging BAS
  • Maintaining and posting the ledger

Maintaining the ledger can be done electronically, as well as in physical form – like a book or spreadsheet. However, while using technology makes things easier, it is good practice to have supporting documents on hand in order to supply them to the ATO if needed.

While there is a wide variety of other tasks a bookkeeper can undertake, they are primarily focused on the ongoing maintenance of your financial records.

Do I Need an Accountant or a Bookkeeper?

As you can see, while the two roles have some overlap, they are different. A bookkeeper and an accountant provide widely different benefits for your business. While some accountants do, also, offer bookkeeping, it is important to remember the cost difference. An accountant may request a higher fee for bookkeeping than a bookkeeper.

Despite their differences, it is easy to see that an accountant and a bookkeeper offer substantial benefits that promote the growth of your business. Rather than viewing them as warring factions, it is invaluable to see how an accountant and bookkeeper work together to help your business.

Want to know more? Contact the team at Siragusa, today, for more information on our services! Let us help your business today!