The Difference Between an Accountant and a Bookkeeper (and Why You Need Both)

Bookkeepers vs. accountants: What’s the difference?

Bookkeepers and accountants may have overlapping duties but these roles require different training and skill sets. Here’s an overview of each financial professional.

What is a bookkeeper?

A bookkeeper is an administrative professional who follows a specific set of procedures or tasks related to a business’s day-to-day financial management. While the job may require specific skills, software knowledge and training, becoming a bookkeeper doesn’t require any formal education.

However, bookkeepers typically take a bookkeeping course or certification program to stay competitive in the field. For example, the National Association of Certified Public Bookkeepers offers a licensing program for industry professionals who wish to expand their expertise.

What is an accountant?

An accountant is a specialized financial professional who handles higher-level financial structuring and analysis for a business. Becoming an accountant requires a four-year college degree in accounting, finance or business administration and additional specialized training.

You may have also heard references to certified public accountants (CPAs). A CPA is an accounting professional who has completed the Uniform Certified Public Accountant Examination. This certification ensures that all CPAs operate according to standardized methods and ethical requirements. CPA exams are rigorous, consisting of four tests administered over a four-hour period. According to the American Institute of CPAs, the minimum score to pass the CPA examination is 75.

While some accounting firms may have both certified and noncertified accountants, at least one CPA must hold the ultimate responsibility for managing your company’s finances.

Bookkeeping tasks vs. accountant responsibilities

To help you match the right task with the right professional for your business, we’ll break down the tasks most commonly assigned to bookkeepers and accountants.

Common bookkeeping tasks

With proper standards and procedures in place, a trained bookkeeper can manage the following tasks for your firm: 

• Create and send invoices
• Record customer payments 
• Monitor late payments and send payment reminders
• Record, process and pay invoices from suppliers
• Monitor and record inventory changes
• Process petty cash transactions
• Categorize credit card and other daily expenses
• Process payroll

Depending on a company’s size and how often the above responsibilities must be accomplished, a small business might choose to complete these tasks in-house, contract with a third-party bookkeeping service or hire a bookkeeper to work full-time. Additionally, some accounting firms also offer bookkeeping services.

Specialized responsibilities for accountants

CPAs are tasked with higher-level, more specialized responsibilities, which is why they earn more. In some cases, a noncertified accountant can handle these tasks with the careful oversight of a CPA:

• Create and manage the chart of accounts
• Accrue and defer revenue and expenses
• Design and maintain financial statements, such as cash flow statements and profit and loss (P&L) statements
• Build financial forecasts
• Create a budget and compare it to actual expenses
• Generate custom financial reports to address specific issues
• Determine estimated taxes and prepare tax documents
• Monitor issues related to financial and tax compliance
• Identify potential tax write-offs or other profit-maximizing opportunities

Because these critical tasks tend to be relatively infrequent in small business accounting, many companies contract with an outside CPA or accounting firm to meet their accounting needs.

An accountant and bookkeeper can work together 

Small businesses often make the mistake of leaving bookkeeping tasks undone or poorly completed, forcing the company’s CPA to complete them before they can move on to higher-level accounting duties. This issue is so widespread that many accounting firms maintain in-house bookkeepers to handle related projects. 

Accountants can be expensive, particularly if you pay them hourly, so you don’t want them spending time on essential bookkeeping tasks that a bookkeeper could handle at a much lower cost.

To reduce spending while maximizing your financial team’s effectiveness, consider working with a quality bookkeeper and a CPA. Ensure they communicate regularly and use the same standardized methods and best practices. Understanding and properly delegating these roles will improve your bottom line.

Best accounting software alternatives to hiring a bookkeeper or accountant

If you’d rather not hire a bookkeeper or an accountant, accounting software is a great alternative for small businesses. Here are four of the best accounting software platforms to consider:

Zoho Books

Zoho Books can help you automate financial tasks in your business, such as sending invoices and payment reminders, generating reports and tracking inventory. The company provides a client portal that makes it easy for customers to receive estimates, view invoices and pay bills. As our detailed Zoho Books review explains, the standard plan is $15 per month, but businesses that generate less than $50,000 in annual revenue will qualify for a free plan.  

FreshBooks

FreshBooks is a great option for businesses that frequently invoice customers and process accounts receivables. The software allows you to create branded invoices and schedule them to be sent at specific intervals. The FreshBooks mobile app makes it easy to stay on top of outstanding payments and create payment schedules for customers. Our FreshBooks review outlines the solution’s payment options, which start at $19 per month, although signup discounts are often available. 

Xero

Xero’s monthly pricing starts at $15 and isn’t based on user numbers. That means you can add employees to your account without worrying about price increases. As our Xero review highlights, the platform’s dashboard is intuitive and easy to navigate and provides a quick overview of your company’s financial performance. 

QuickBooks Online

QuickBooks Online is one of the most popular accounting software options around. If you hire an accountant or bookkeeper in the future, they will almost certainly be familiar with QuickBooks. The software integrates with over 750 apps, allowing you to create a customized solution for your business. Our QuickBooks Online review details how businesses can use the software to create extensive financial reports, such as aged receivables, P&L statements and trial balances.

Benefits of using accounting software instead of a bookkeeper or accountant

If you’re starting a new business, you may not yet need a bookkeeper or an accountant. Here are the biggest benefits of using accounting software when you’re not quite ready to expand your financial team:

• Accounting software can lower your costs: Accounting software can be decidedly less expensive than hiring a full-time bookkeeper or accountant. However, you should choose a well-regarded accounting package, especially if you suspect you’ll hire a financial professional in the future. They’ll likely be familiar with your platform if you choose a well-known option. Still, you may need to purchase their preferred software as well as cover their individual rates. 
• Accounting software lowers the risks of data loss: While most financial professionals and firms will be trustworthy, the more external sources with access to important data, such as your business finances, the higher the risk of a data breach. Using software to manage your financial tasks keeps all your critical data in-house. (You still must abide by cybersecurity and risk management best practices to keep your data safe.)
• Accounting software helps you stay legally compliant: If you choose the right accounting software and work with it diligently, you’ll help minimize the risk of costly accounting mistakes that can impact your regulatory compliance. Compliance errors can cause irreparable damage to any brand and potentially incur IRS fines. Some accounting software providers offer to handle any issues arising from accounting errors, even offering to provide IRS representation and cover fines.   

Jamie Johnson contributed to this article.