What is a bookkeeper?

While some bookkeepers are responsible for payroll, in many businesses, payroll is handled by a human resources (HR) payroll specialist or external provider. They primarily focus on accurately documenting daily transactions and handling financial processes for the financial team.

Modern bookkeepers often utilize cloud-based platforms, facilitating real-time collaboration. Their accuracy supports tax compliance and audit readiness, but they typically do not interpret data for strategic decision-making. The scope of the job varies from one company to the next.

A bookkeeper’s duties may include:

• Entering daily transactions into accounting software
• Reviewing entered data for accuracy
• Reconciling your organization’s bank accounts
• Handling accounts payable and accounts receivable
• Preparing some financial documents
• Processing payroll
• Assisting staff accountants, if applicable

What is an accountant?

An accountant typically goes beyond what a bookkeeper does to analyze and interpret financial data and advise the company on it, both strategically and operationally. Their role is more analytical than administrative. Accountants often ensure compliance with Generally Accepted Accounting Principles (GAAP) or project-based costing standards to ensure the authenticity and integrity of the work.

Common duties of an accountant include:

• Creating financial documents
• Using financial information to write reports
• Monitoring your financial situation
• Offering financial recommendations
• Preparing and filing business tax returns

Similarities between accountants and bookkeepers

Both accountants and bookkeepers are involved in the overall accounting process. They typically work together within the accounting department. Specifically, an accountant uses the information a bookkeeper enters to make recommendations and create advanced reports.

While there may be overlap, the roles typically manage different parts of the process. Bookkeepers handle real-time data, while accountants focus on period-end and strategic insights. However, both typically have key accounting skills, including strong math, data entry, data analysis, account reconciliation and critical thinking skills.

“Many growing businesses have benefited from hybrid models. They use bookkeepers for daily tasks while reserving accountants for strategy, reporting and tax compliance.”

—Tarik Griffith, accountant

Differences between a bookkeeper and accountant

Comparing a bookkeeper vs. accountant helps you understand the roles and decide which one best fits your company’s financial needs:

Educational requirements

One major difference between a bookkeeper and an accountant is the requirements for the positions. Bookkeeping positions generally don’t require a degree. You might prefer candidates who have education or training in the field, but it’s not typically a requirement. Many bookkeepers now pursue certifications, such as Certified Bookkeeper from the American Institute of Professional Bookkeepers (AIPB) or QuickBooks ProAdvisor.

Accountant positions usually require at least a bachelor’s degree in accounting or a related field. Higher-level accounting roles might require a master’s degree or accounting certifications. General accountants typically don’t need to be licensed, but certified public accountants (CPAs) must meet their state’s licensing requirements.

Skills required

Despite the similarities in skills, such as basic numeracy skills and critical thinking, there are usually differences in the skills required. Accountants typically need advanced skills and knowledge, which may include:

• Analytical skills
• Financial report creation
• Reporting compliance
• Tax return preparation

Scope of work

The scope of work of a bookkeeper vs. an accountant also varies. Bookkeepers typically handle basic accounting tasks with an administrative focus, whereas accountants handle advanced accounting activities. Accountants can handle bookkeeping tasks, but many accounting tasks may be beyond the scope of a bookkeeper.

Think of an accountant as your broad view financial expert. They look at all your business finances to help you streamline and improve them. Meanwhile, bookkeepers are usually experts in day-to-day financial tasks.

Bookkeepers look at smaller financial components of your business, such as daily transactions and make sure they’re accurate. An accountant uses the compiled information to reconcile various business accounts on a monthly, quarterly and annual basis.

Decision-making

Bookkeepers typically don’t have decision-making responsibilities. They might have control over how they handle their processes, but their role involves carrying out specific tasks. Accountants often make financial decisions or provide strategic advice to company leadership on matters such as expansion, fundraising and corporate restructuring.

Pay differences

The pay discrepancy between a bookkeeper and an accountant is another noticeable difference. Bookkeepers typically earn less than accountants, reflecting differences in training, responsibilities and scope of work.

Accountant salaries also tend to vary more widely based on location, level of experience and industry, while bookkeeper pay is often more consistent across roles.

The amount you pay an accountant versus a bookkeeper depends on several factors, including your location and the scope of the job. Qualifications can also influence pay. For example, certified public accountants (CPAs) are typically paid more than non-certified accountants.

For the most up-to-date salary information, see bookkeeper salaries and accountant salaries on Indeed, which are updated regularly.

Bookkeeper vs. accountant: Which one to hire

Knowing the difference between a bookkeeper and an accountant helps you decide which one is best for your company. Every organization is different when it comes to finances.

Consider the benefits of hiring each role and evaluate your situation to decide:

Benefits of hiring a bookkeeper

Reasons to hire a bookkeeper include:

• Accuracy for day-to-day transactions
• Ability to handle simple financial tasks
• Compliance with tax regulations

Benefits of hiring an accountant

If you hire an accountant instead, you gain these benefits:

• Deeper financial insight
• Stronger knowledge of accounting principles and reporting requirements
• Ability to recommend and implement financial controls and processes

How to choose between a bookkeeper vs. accountant

Consider these details about your business to help you decide which to hire:

• Volume of daily transactions: If you have many daily transactions, you might prefer a bookkeeper, whose primary job is recording those details.
• Complexity: Small businesses with simple business structures may only need a bookkeeper to manage finances. If your business is highly complex, an accountant provides financial guidance.
• Financial goals: If you’re looking for an informed financial strategy, an accountant offers that expertise. When your focus is on keeping up with your day-to-day financial management, you may want to hire a bookkeeper.
• Industry regulations: Industries with strict financial reporting requirements and regulations may benefit from having an accountant. They receive training to help them ensure compliance.
• Budget: Accountants typically earn a higher salary, so your budget may be a factor. However, the financial guidance from an accountant could improve your cash flow.
• Organizational changes: If you anticipate changes to your company, such as an expansion, an accountant could be beneficial. They evaluate the situation and help you navigate financial decisions as your organization evolves.

Hiring an employee vs. using accounting and bookkeeping services

Regardless of whether you choose a bookkeeper or an accountant, you have the option of hiring them directly or using their services. Outsourcing business processes such as bookkeeping and accounting is often a cost-effective option for smaller businesses.

By outsourcing, you gain the accounting services you need on a limited scale and can therefore potentially save money. Outsourcing is common these days via virtual chief financial officer (CFO), bookkeeping services, often bundled with complementary financial dashboards.

Accounting and bookkeeping services often charge a higher hourly rate than you would pay an employee. However, you only pay for the amount of time they spend on your accounts. If you only need a few hours of bookkeeping or accounting per month, you may save money by hiring a contractor or temporary employee. To help decide which option is best:

• Determine how much accounting and bookkeeping work you have each month.
• Compare the costs of accounting and bookkeeping services in your area to estimate your monthly or annual expenses.
• Next, calculate the cost of having an accountant or bookkeeper on staff instead.

When deciding to hire an accountant versus bookkeeper, first consider the advantages and drawbacks of each option before making your final decision. If you are looking for someone to make financial decisions for you or provide feedback based on financial data, an accountant could be a better hire. For more day-to-day financial tasks and regulatory compliance, think about hiring a bookkeeper instead.