Bookkeeping Vs Accounting

Many people wonder what the difference between bookkeeping and accounting is because they seem very similar.

bookkeeping vs accounting

What is the difference between bookkeeping and accounting?

Bookkeeping and accounting perform the same functions in many respects despite what you might see on some other websites.

The words can often be used interchangeably. However, people use each term differently when they are marketing their services.

Usually, bookkeepers are independent contractors that help small business owners.

Accountants are typically employees of midsize to large businesses. An accountant could also work at an accounting firm. Both jobs do not require accreditation, but both jobs can be held by a CPA.

Bookkeepers typically help small businesses record their financial transactions and summarize those transactions. They also can help with payroll and preparing financial statements.

Accountants do the exact same thing though, so you can’t say that both professions differ greatly.

Another difference is that a bookkeeper typically provides a wide variety of financial services for a business while an accountant might be specialized in a certain. A bookkeeper might provide tax and accounting services while an accountant might only work on receivables. An accountant might only work on one side of an audit or one type of entity for tax preparation.

A bookkeeper is like a financial swiss army knife for a small business.

Can a bookkeeper become an accountant?

It’s much easier for a bookkeeper to become an accountant than it is for an accountant to become a bookkeeper. Bookkeepers typically have the same training as accountants while accountants do not train in many of things bookkeepers do.

Technology is Changing Bookkeeping and Accounting

There are tons of online bookkeeping service providers today, so there are many bookkeepers that are being put out of work by this.

Are bookkeepers still needed?

I believe that bookkeepers will still be in demand in the future.

Bookkeepers might lose jobs to the technology. However, as the economy grows, more jobs are created. The opportunities lost to online bookkeepers will be replaced by more businesses created by a constantly growing economy. Not all business owners will want to deal with online bookkeepers and software.

Many people won’t trust their financial records to a faceless, online bookkeeper.

Accountants also have the danger of being replaced by technology.

Accountants also have to deal with automation. Again even though technology can replace a lot of tasks performed by accountants, increased regulations and complexity will provide ample opportunities for accountants in the future.

The primary task that technology will replace for both accountants and bookkeepers is data entry. Many bookkeepers and accountants used to be able to stay busy by just transposing data from hardcopy files to spreadsheets and quickbooks. That is no longer a viable solution now that bank accounts can be linked to cloud accounting solutions.

Certifications

A significant difference between an accountant and a bookkeeper is a certification.

There are specific certifications to be a certified bookkeeper. Not all accountants get that certification. A bookkeeper might choose to get those certifications to appeal to small business clients.

ICB Certifications – The Insitute of Certified Bookkeepers provides various certifications for bookkeepers

Universal Accounting Center – you can receive the Professional bookkeeper designation from the UAC

American Institute of Professional Bookkeepers – you can receive a certified bookkeeper designation from this insitution

National Association of Certified Public Bookkeepers – You can receive a Certified Public Bookkeeper designation

Accountants typically get a certified public accountant certification which is a certification for public accounting. A bookkeeper can also get this certification though, and many bookkeepers do have their CPA.

Public accountants usually get a CPA to provide certain unique services to clients like audits. Bookkeepers aren’t worried about providing audit services to clients. Instead they help their clients book and understand their financial transactions.

Accounting Software Versus Bookkeeping Software

A lot of the certifications for bookkeeping rely on bookkeepers becoming familiar with certain softwares like quickbooks. You don’t really have to be certified in software in order to be an accountant. As an accountant you are mainly tasked with understanding accounting principles. You learn accounting principles as a bookkeeper, but you must also be familiar with bookkeeping software.

It’s easier to get experience as a bookkeeper

Many bookkeepers need help with managing their clients. Therefore, they don’t always need college graduates with degrees in accounting. To get experience as an accountant, you often need at least a bachelor’s degree. Many public accounting firms require you to get your cpa as well. This makes it harder to get experience as an accountant.