Accountant vs. Bookkeeper | Differences Explained

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Any business that wants to succeed needs to have dedicated financial professionals on hand, who track expenses and purchases, reconcile accounts, and perform other types of financial record keeping and consolidation that help keep the organization running. Bookkeepers and accountants fulfill most of these tasks. But perhaps because they both focus on financial goals and assistance, many people believe the two professions to be relatively interchangeable. In reality, bookkeepers and accountants are separate professions that serve distinct roles in an organization.

What Does an Accountant Do?

An accountant provides key financial analysis services, usually with the information provided by a bookkeeper. In a meta-sense, accountants analyze extensive financial data in order to provide businesses with insights and financial advice that can be backed up by that information. Put another way, accountants take a look at the big-picture financial information of a company and help provide advice and insight with that information. Because of this stress on big decisions, accountants usually have more education than bookkeepers (often a four-year degree in accounting or a similar field). Furthermore, they may head or lead bookkeepers in data collection and analysis, often acting as heads of financial departments.

Core Functions of Accounting

The core function of an accountant is to provide long-term and in-depth financial advice and analysis to the companies or clients they work for. This information can help businesses determine, for instance, if funding a new business expansion is a good idea. Accountants may also:

  • Look over data collected by a bookkeeper to verify that it’s correct
  • Create tax reports, perform audits, get financial reporting records ready for tax season, check income statements and balance sheets, and more
  • Give businesses information about financial forecasting, various opportunities for growth, business trends, and potential financial warning signs and flags 
  • Assist business owners or executives to understand the financial impact of their business decisions
  • Adjust financial information entries

What Does a Bookkeeper Do?

Bookkeepers are the entry-level versions of accountants in some ways. Bookkeepers essentially record daily transactions and other financial shifts or decisions consistently and accurately. By collecting this information as accurately as possible, they provide meaningful data points for accountants to analyze later so that business executives can make informed decisions about investments, expansions, and hiring, to name a few.  While on the surface bookkeepers may seem to do the same job as accountants, in reality bookkeepers don’t usually analyze or provide in-depth advice to their companies or clients. Instead, their job is more often limited to plain data collection, i.e. “bookkeeping.” Another way to think of bookkeeping is that it’s about data entry and coding. It’s much more transactional than accounting, but it’s also very detail-oriented. While bookkeepers don’t normally have as much educational background as accountants, bookkeeping itself can also be a complex job for larger companies that may have thousands of financial transactions or pieces of information to log and account for every week. Bookkeepers:

  • Record information
  • Make sure all recorded information is accurate


  • Analyze that information
  • Provide insight and financial advice to companies and clients

Core Functions of Bookkeeping

The core functions of bookkeepers are a little more rote and standardized. Bookkeeping involves recording daily transactions as consistently and accurately as possible, as both accountants and executives cannot make responsible decisions without accurate information. Bookkeeping is often comprised of:

  • Recording all types of financial transactions
  • Producing invoices and other unanswered documents
  • Posting debits and credits
  • Balancing and otherwise maintaining subsidiaries, historical accounts, and general ledgers
  • Inputting values for and completing payroll documents

Of the above duties, many bookkeepers specifically focus on maintaining general ledgers. In a nutshell, a business’ general ledger is the core document where bookkeepers record the business’s sales and expenses totaled. Note that most bookkeeping duties these days are electronic, so bookkeepers need to know how to use the most types of common bookkeeping software if they want to keep up with the industry. Only very small businesses still perform the majority of their bookkeeping and recording tasks by hand, and even at that size, many startup companies are offering bookkeeping softwares specifically designed for sole proprietorships or employee-free partnerships.

When Do You Need an Accountant?

New businesses often need to hire both of these professionals or just one or the other, so it helps to know which one you need and when. Accountants are more experienced professionals that provide advanced financial insight and analysis to their companies and clients. While accountants’ jobs may still encompass some bookkeeping tasks from time to time, accountants in general are more advisory and analytical. Your business needs an accountant when you need someone to provide financial projections and give you advice when it comes to making future decisions that could affect the finances of your company. Since practically every business decision affects finances in some way, having an accountant is never a bad idea. For instance, need to know if taking a new business loan from a lending institution is wise? An accountant can help you determine the answer based on looking at your current expenses, your projected income, and many other factors. Furthermore, you may need an accountant for specific times of the year . Some businesses only use accountants during tax season, as accountants are very valuable for tax advice and planning. Businesses may also opt to hire accountants when planning business expansions or developments. Accountants can tell businesses whether certain expansions are advisable given the current financial climate of the greater economy and their own expenses and income. Further uses of accountants include:

  • Auditing your company. If your company has grown so large that bookkeeping no longer gives you the full picture of your expenses and income, an accountant can audit your company and do a deep dive into every aspect of financial movement within your business.
  • Corporate reporting and compliance are also often handled by accountants, who can make sure that your business is up-to-date with certain tax codes or other corporate compliance concerns.
  • Making big financial decisions, such as whether to close the doors on your business, sell your business to another owner, merge with another business, and so on.

When Do You Need a Bookkeeper?

Many businesses will need bookkeepers earlier than they need accountants, however. That’s because bookkeepers perform more standard and consistent work than accountants, who are often more specialized professionals. Practically every business can benefit from at least one bookkeeper to keep track of finances , including expenses and all available income. Many small business owners do bookkeeping themselves at the start, though this is inadvisable as their business grows, since their duties will grow as well. Bookkeepers are the ideal professionals to hire ASAP, as they will help you keep more accurate records and avoid any potential pitfalls that could stall your business from growing as rapidly as possible. You should specifically hire a bookkeeper so they can:

  • Process the majority of your financial transaction documents like invoices, payments, and receipts
  • Maintain and process your payroll system
  • Reconcile various accounts and prepare those reconciliation reports
  • Manage all of your accounts receivable and payable

Do You Need Both?

Eventually, yes. Unless you plan to do the consistent and exhaustive work of bookkeeping and the analytical yet crucial work of accounting yourself, your business will eventually require both bookkeepers and accountants to stay afloat and be successful. Both types of financial professionals provide valuable services to businesses even though they seem to be very similar on the surface. In most cases, small businesses start with either a single bookkeeper or the owner does the bookkeeping themselves. Eventually, businesses may grow large enough that they can keep several bookkeepers and at least one accountant on staff at all times. This allows them to be much more flexible and make financial decisions more rapidly.

When Should You Hire Either?

Ideally, it’s a good idea to hold off on hiring an accountant until you absolutely need them if you're a small business without a lot of spare cash. On the flip side, a bookkeeper could potentially save you money right out of the gate by helping you stay on top of your numbers and data so you know how much extra your business has to spend (or if your business needs to cut back on spending).  Those mistakes seem trivial, but they’re very easy to make as your business picks up and transactions or purchases become more common. Thus, it’s a better idea to hire a bookkeeper first and an accountant second. 


It’s a good idea to keep the potential or projected costs for bookkeeping and accounting in mind as you start up your business, especially as you apply for a business loan . Be sure to hire excellent bookkeepers and accountants for your business and you’ll see much more financial success, plus avoid errors in the long run. Good luck! Sources

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