What’s the Difference Between a Bookkeeper and an Accountant?

Fledgling small-business owners are often told that they should hire a professional to help with the accounting side of their companies. Because both bookkeepers and accountants offer services, understanding which one you need can be puzzling.

Katie Bunschoten (pictured), founder and owner of the bookkeeping and consulting firm KHBOffice, helps new businesses get up and running — and shows owners how to keep on top of accounting. The Intuit Small Business Blog recently asked for her take on bookkeepers vs. accountants and when to hire them.

ISBB: What are the main differences between bookkeepers and accountants? What training do they need to call themselves one or the other?

Bunschoten: The terms “bookkeeper” and “accountant” can be interchanged to a degree, so I’m going to focus on the literal job roles. Many bookkeepers get their start acting as a data-entry clerk or entry-level bookkeeper for a business and grow, through experience and merit, into being a go-to person for the day-to-day financial recording. The term “bookkeeper” is pretty literal: The bookkeeper keeps the books and retains documentation for transactions.

An experienced or certified bookkeeper may eventually move into being an accountant (the terminology and rules on what a bookkeeper may do and call themselves may be dictated by state accounting boards). An accountant may also focus on reporting, business analysis and processes, and possibly advice. Many times a bookkeeper and accountant work in tandem, with the bookkeeper operating as a “feet on the ground” professional, promoting a stronger relationship between an accountant and a business owner.

Both bookkeepers and accountants can obtain certification, if they choose, through a professional organization such as AIPB (American Institute of Professional Bookkeepers) or the AICPA (American Institute of Certified Public Accountants), respectively. The terms “bookkeeper” and “accountant” can be used without certification, so it’s important to know what qualifications people have before hiring them.

How do small-business owners figure out which they need? 

Many times it depends on the industry and the level of expertise required. Questions we ask our clients in order to structure our services include: What industry is the company is in? Do they maintain a number of fixed assets or a large amount of inventory? How many employees do they have? The more complex the organization, the more important it is to make sure that the company’s bookkeeper is also supported by a good CPA who can provide advice as and if needed. It’s a great partnership that keeps communication open and data strong.

Also, it’s not a bad idea to ask for client references and proof of purchase of E&O insurance, which is available to both bookkeepers and accountants.

How expensive are bookkeepers and accountants?

Bookkeepers are, generally speaking, less expensive than CPAs, which makes them a great choice for a company that needs day-to-day expertise. A good bookkeeper can also act as the “canary in the tunnel,” bringing attention to something that might need higher levels of advice. Pricing depends on geographic location and industry, as well as experience.

I would recommend calling around to local accounting or CPA firms, other business owners, or even local business-development centers in order to obtain a referral. A bookkeeper is best found through word of mouth, and many times the you have to look hard because, quite frankly, a good bookkeeper gets busy pretty fast.

I also would highly recommend meeting with an accountant or CPA at the onset of a bookkeeper engagement and periodically afterward. Bookkeepers are a great way to manage expenses, but having the periodic support of a CPA ensures that you have more than one set of eyes on the books. This not only helps to provide more accurate data, but also can act as a deterrent to fraud or theft.

How do you make sure that you hire a qualified bookkeeper or accountant?

Ask for references, and call them. If certified, call the board or organization through which the professional is certified. There are also free screening tests on the marketplace, especially for bookkeepers, who may not always be certified and where the onus is more on experience. A referral means a lot.

What other qualities are important?

Be sure to seek out a bookkeeper and an accountant who can speak to you in plain English. Many financial or accounting professionals struggle with this. Also, never be afraid to stand up and say, “I’m not fully understanding what you are telling me. Can you rephrase?” Accounting can be a lot of gobbledygook and is a language all its own. Professionals can be very good at what they do, but they also need to be able to explain concepts easily.

A professional demeanor, friendly personality, and honesty are also important. You want to be sure that if there is something crucial that needs to be discussed, the discussion is timely — and isn’t put off if it’s unpleasant.

When should you hire a bookkeeper?

The earlier the better. Many owners will try to sort out the information themselves and then have a bumpy ride when it comes time to transition. A good compromise is to consult with an accounting professional when the business is started and then perhaps touch base periodically, such as once a quarter. Ask for a quote or pricing, and fit in some sort of periodic meeting into your budget. Errors tend to continue until caught at year end or the next time a professional sees the books. Books that are set up correctly in the beginning can be a strong tool for measurement and growth. Books measure the pulse of a business, and good bookkeeping expands past basic cash expenses.

Additionally, most accountants and bookkeepers are happy to answer a few questions, and they enjoy being able to see a business grow and for clients to be successful. After all, the basement startup today could be their biggest client tomorrow.

About Angie Mohr

Angie Mohr is a Chartered Accountant, Certified Management Accountant, and financial consultant. She has worked with thousands of clients over the years from mom and pop startups to rock bands and celebrity chefs. She is the author of the best-selling Numbers 101 for Small Business series of books and writes for Forbes, MSNBC, the Globe & Mail, Yahoo! Finance, Investopedia, and Motley Fool, among other financial publications. Her new book, Piggy Banks to Paychecks, helps parents teach their children how to be money smart. She splits her time between Canada and the United States and currently lives by the ocean with her husband and two children, who have finally learned that money doesn’t grow on trees. For more, go to www.piggybanks2paychecks.com.
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23 comments
AMP UK
AMP UK

This is generally a wonderful article. I enjoyed reading.This is really great work which is providing such a useful piece of information here in the blog. Thank you for sharing.

LuettaFox
LuettaFox

A very helpful article discussing the difference between bookkeepers and accountants. The insights that you have shared are indeed informative. Thanks for posting. 

Book In Essence
Book In Essence

Without a doubt, some bookkeepers know just as much as accountants. But bookkeepers are generally cheaper. I feel there's no reason to suggest that a full charge bookkeeper is not an accountant, based on the loose terminology. To me, the line should be drawn with the CPA certification as the main qualification for the actual title of accountant. 

ABAC
ABAC

Both provide the same solutions I think. From this weblog, I know about the distinction between a financial advisor and a cpa. But I think an accountant’s requirement is more than a financial advisor.

Vanilla_Dazzle
Vanilla_Dazzle

My understanding is that a bookkeeper is like an accountant's secretary, yes? Although, the line gets fuzzy when you look at a full charge bookkeeper with accounting courses vs an accountant who's not a CPA, yes? Don't the accountants have to know more about compliance, laws and complicated stuff?

Also question, should a bookkeeping intern be asked to file the 1099s their first month in?

Navacue Accountants
Navacue Accountants

I think they both offer the same services. From this blog, I know about the difference between a bookkeeper and an accountant. But I think an accountant’s demand is more than a bookkeeper.

CBS Bookkeeping
CBS Bookkeeping

Angie - Great post, we're a group of bookkeepers in CT that works WITH accountants and CPA firms often but like you mentioned above - we too need to explain the difference in what we do vs. what a CPA does.  Thanks, great post!

 

-Tim

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Gerald
Gerald

Awesome article. As a CPA, most people ask me the same question too and I think AccountstechAZ has it right on the money, there are different levels of accountants, the nurse, PA and doctor is a fantastic example.

John
John

Excellent article Angie! I couldn't decide whether or not if I needed to get a book keeper or an accountant. After researching, we decided to go with an accountant. We have lots of numbers to go through. So nice to read this, glad there is a post about the difference!

Richard Accountant
Richard Accountant

You are so awesome! I don't think I have read through a single thing like that before. So nice to find somebody with some unique thoughts on this subject matter.

Sophie
Sophie

Great article. Its a question I have heard many times and i have still yet to answer it

KatieBunschoten
KatieBunschoten

To a point, perhaps, but no matter what role you play you have to know the why, or else you aren't providing value. Bookkeepers need to know both, but accountants should act as a strategist, knowing how the data they are looking at affects longer term operations. They need to be able to apply this knowledge in creating a higher level value, rather than charging higher rates for data entry. In addition, I don't think the value of fraud deterrent through having two professionals involved can be overlooked.

concerodurwin
concerodurwin

Bookkeeping is procedural and is largely concerned with development and maintenance of accounting records. It is the "how" of accounting. While, accounting is conceptual. It is concerned with the "why", reason or justification for any action adopted.

 

KatieBunschoten
KatieBunschoten

Actually, a bookkeeper does have the option of obtaining certification through experience and certification, but it's not commonplace yet (AIPB.org). A CPA has to be part of the picture, because the other parties are not permitted to do attestation / sign letters / certify financials, at least not in our area. It's interesting that those distinctions are a little more accelerated in your area. Here in Cincinnati they are more or less just emerging as distinct professions.

AccountechsAZ
AccountechsAZ

I like where you're going, Angie, but in my market anyway, it's really come to three levels: bookkeeper, accountant, and CPA.

 

They may be the same person, two may be combined, or all three might be different. Regardless, I differentiate between them on the basis of knowledge. A bookkeeper knows where to post, and an accountant knows why it should be posted there. The CPA has additional education, and has had their knowledge certified through testing and professional requirements.

 

Sometimes I say it's like a nurse, a PA, and a doctor. The nurse usually works with the patient more closely than anyone else. Similarly, a bookkeeper often has a better feel for the pulse (bad pun) of a business than anyone else because they're more closely involved with daily activity. The PA can prescribe, and act pretty much as a doctor, and they're cheaper, but they work in conjunction with a doctor who has the final word. An accountant helps with larger issues than the bookkeeper is able to handle, and helps minimize the cost of working with a CPA by prepping everything ahead of time...  The final word still comes from a CPA who does a tax return, compiles or reviews the financials, and provides overall guidance to everyone else.

KatieBunschoten
KatieBunschoten

I think the connotation is changing. Bookkeepers are becoming more visible in the industry as day to day professionals, but the importance of a good analyst can not be disparaged. It's an effort to differentiate between two distinct areas of expertise, and to lower the cases of accountant/bookkeeper fraud at the same time. 

kbt1040
kbt1040

I think this is very gray...Today that word is pretty much synonymous with each other.  I don't think you should have to go to two different people for bookkeeping/accounting and tax preparation.  I think it's just the connotation of bookkeeper is much less favorable than accountant.

AndyGutierrez
AndyGutierrez

 @Book In Essence A full charge bookkeeper is not an accountant. And a CPA is not the only accountant that exists. That mentality not only harms the industry, but harms the credibility of real accountants, and I take offense to it.

 

Putting the words, "full charge," in front of the word, "bookkeeper," does not an accountant make. More commonly, I see those words added by cheap companies who want to pay bookkeeper prices for someone more qualified.

 

Less commonly, but just as problematically, I see bookkeepers who have no business calling themselves accountants put the words, "full charge," in front of their titles because they've been at it so long they apparently feel something about accounting must have been learned through osmosis.

 

Beware deifying the CPA. Those letters mean someone can pass a test. You should see how many returns I've had to repair after they were mangled by a CPA. You should also know how many CPAs (some of whom I count as friends) can't make a journal entry and don't understand the balance sheet.

 

Calling someone a bookkeeper is not an insult unless the bookkeeper suffers from an inferiority complex. If that person truly knows enough to be an accountant, then the appropriate action is to call oneself an accountant. Plenty of accountants offer bookkeeping rates when using a lower level of skill.

Book In Essence
Book In Essence

 @AndyGutierrez I personally don't see how that mentality is offensive at all. We all know at heart that the lines between bookkeeping and accounting have been getting blurrier as time goes on. Perhaps the term bookkeeper is defined by the tasks an employer has structured for him/her, but to outright say a full charge bookkeeper is not an accountant is a little insulting. You're implying there's a lack of capacity to perform any other functions of accounting, and I don't believe that's the case.

 

"if that person truly knows enough to call oneself an accountant, then the appropriate action is to call oneself an accountant". If that's the case, why isn't a full charge bookkeeper an accountant?

 

Also, I admit, maybe I was hasty in saying the CPA certification should be the cutoff in claiming the "accounting" title. But I wouldn't downplay any CPA's ability just because he/she "passed a test". With as many requirements as there are to become licensed, I find it hard to believe that any CPA cannot understand a balance sheet, but I'll just have to take your word on that. 

 

 

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