When you think about the tasks you would love to outsource in your business, does bookkeeping come to mind? It is at the top of my list!
If you are anything like me, you dread bookkeeping tasks even with the great bookkeeping apps now available.
And if you (okay me…) are being honest, you probably aren’t even sure what the difference between a bookkeeper and an accountant is.
That’s why you and I are lucky that there crazy people out there, people like my friend Jessica Ritter, people who actually love bookkeeping.
Jessica likes bookkeeping so much that she is a Bookkeeping Professional and CEO of Wholesome Bookkeeping.
Today Jessica is breaking down the mystery of the difference between a bookkeeper and an accountant.
(If you are ready to hire a bookkeeper check out Jessica’s guest post How to Find the Right Bookkeeper for Your Business)
Bookkeeper vs. Accountant: What’s really the difference?
I’m Jessica and I have over 5 years experience in the finance realm. I firmly believe that managing and understanding your finances is the way to a profitable and sustainable business that will support your personal life.
Key to successfully managing your finances is understanding the tools available to you.
One of the top questions business owners ask me is What is the difference between an accountant and a bookkeeper?
And I am glad they ask. The answer has changed over the years and can vary since there are so many different types of accounting.
Nurse vs. Doctor: What really is the Difference?
How many times have you called the nurse at your kid’s Pediatrician’s office? I have two kids, ages three and one, and I can’t even give you a good ballpark number of the times I’ve talked to the on-call nurse.
I call with all kinds of questions and always ask, “Should I bring them in to see the doctor?”
Each time I’ve called, the nurse gives me the information I need, warning signs to look for etc. and 9 out 10 times, my kids do not need to see the doctor.
But the doctor is there and ready for when we do have a more specialized issue the nurse can’t confirm over the phone.
A Bookkeeper is like a Nurse for Your Books
A bookkeeper is like a nurse for your books. They are (typically) the ones doing the day-to-day stuff.
They will be the first to notice things that might raise a red flag. If they’re really good, they’ll even know how to fix it!
A bookkeeper can produce your financial statements/reports and many will interpret them for you.
I am in close contact with my clients each week. We look at their finances proactively and make the best financial decisions for their business.
Your accountant will be there for the bigger ticket items, like taxes or changing your business from a LLC to a corporation.
Accountants vs Bookkeepers vs Apps
The difference between bookkeepers and accountants has largely decreased over the years with the increase of accounting software.
Before things like QuickBooks, Freshbooks, Wave, etc. bookkeepers were the ones tracking transactions by hand in separate books (yes, actual books), called ledgers.
Once everything was written down, then double and tripled checked, the bookkeeper would hand over these (actual) books to the accountant, who would then use them to prepare the financial statements.
Since many accounting software programs and apps handle the data entry that a bookkeeper would have done 50 years ago, and actual books are no longer used, the tasks of bookkeepers and accountants have blurred more and more.
A bookkeeper can even become a tax specialist without an accounting degree.
These are called Enrolled Agents (EA), and although they are not required to have a Bachelor’s in Accounting, they still go through rigorous testing to achieve their EA status.
The Real Differences Between a Bookkeeper and an Accountant
When you get down to the bottom line, the real difference between a bookkeeper and an accountant can be summarized as follows:
- There are no certification or education requirements for Bookkeepers
- Many bookkeepers choose to gain certifications
- They handle the daily money-in, money-out transactions for tracking and tax purposes
- It Requires a Bachelor’s Degree to be an Accountant
- Accountants can be highly specialized
- A specialized accountant would be your CPA
- General or staff accountants typically do more bookkeeping tasks
I recommend my clients have both a bookkeeper and an accountant.
As a bookkeeper, I handle their day-to-day transactions and help them understand the overall health of their business. Their Certified Public Accountant (CPA), helps them during tax season.
If you are on the fence about outsourcing your bookkeeping, ask yourself this: Would you be able to bring in more income if you had two extra hours each week to work with your clients?
If the answer is yes, it’s very likely the extra income will pay for or exceed the cost of your bookkeeper.
If you are considering a bookkeeper, it is important to note, their expertise can range widely. It’s best to find one that has at least one certification and specializes in one or two types of businesses.
Jessica Ritter is a Bookkeeping Professional and CEO of Wholesome Bookkeeping and can be found at https://www.facebook.com/wholesomebk/. She helps women-owned, service-based businesses make sense of their books so they are empowered to make the best financial decisions for their business, their money flows freely and their business becomes more stable. Jessica has over 5 years experience in the finance realm and is a mom to two energetic kids, loves coffee and pancakes, and enjoys exploring the mountains with her family anytime they get a chance.