Difference Between an Accountant and a Bookkeeper

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Difference Between an Accountant and a Bookkeeper
Pratibha Devasenapathy | Aug-04-2020

Introduction

For any business organisation, both bookkeeping and accounting are extremely crucial processes for prolonged sustainability. In the simplest of terms, bookkeeping is responsible for the recording of financial transactions whereas accounting is responsible for interpreting, classifying, analysing, reporting, and summarizing the financial data.

Bookkeeping and accounting may appear to be the same profession to an untrained eye. This is because both accounting and bookkeeping 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 first task is to record transactions and keep you financially organized, 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

The qualifications required to handle comprehensive accounting processes make an accountant a sort of supervisor for bookkeepers. An accountant may become a consultant to company bookkeepers who ensure financial process accuracy by seeking his or her review and advice. A certified public accountant is the higher expert in the field of accounting, for which the bookkeeper needs only a basic understanding and certification.

The Certified Public Accountant has a more in-depth insight into the accounting aspects of a company and can offer feasible business advice. A Certified Public Accountant gives ideas and advice that may call for the modifications of the books to align with cost practical deduction eligibility scenarios.

The tax accountant has a specialization in the field of taxation and the regulations that come with business mergers, for instance. These accountants may also offer advice on tax structures or tax deductions.

How bookkeeping and accountant roles are being transformed

Bookkeeping and accounting have been in existence since a very long time and both fields have seen a tremendous amount of change in the way the operations are carried out. This trend will continue in a similar fashion in the future too. 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 diminishing. It is interesting 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 keep the books, bookkeeping will become a lot more than just data entry, balancing bank ledgers, and reconciling bank statements. These functions will slowly diminish in the coming years and may even become obsolete, as most of the tasks will be handled by bookkeeping software.

·       Extending the services

Newer technologies have persuaded bookkeepers and accountants to be open to the technological advancements and explore emerging software options. It is an opportunity for bookkeepers to support their clients through this change, presenting value-added services such as payroll processing, credit card reconciliation, 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 the 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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