In the business world, the terms “accounting” and “bookkeeping” are often used interchangeably, as they both refer to financial record-keeping. However, there is a distinction between the two terms. An accountant is a trained professional who analyzes and interprets financial data, while a bookkeeper merely records financial transactions. Do accountants have to do bookkeeping though? We’ll look at why bookkeeping sometimes roles up into accountants’ responsibilities and when it does.
Do Accountants Do Bookkeeping?
Accountants aren’t bookkeepers in their day-to-day job but when the occasion arises, they sometimes have to cross over. When is this? Clients determine it most of the time.
If a client asks an accountant to do bookkeeping then generally the accountant won’t say no. It could even be a service they offer. If they offer bookkeeping then they use junior staff to prepare and do a final review themselves. They need to know how to do it themselves, but it isn’t the highest profit margin service for accountants. Bookkeeping can be lucrative to accountants though since it is consistent month to month or quarterly.
What is Different Between Accounting and Bookkeeping?
Here’s a quick rundown: bookkeepers prepare books, accountants interpret standards, file taxes and conduct audits.
So what does that mean in practice? Bookkeepers are responsible for recording all the financial transactions of a business, including sales, purchases, receipts, and payments. They make sure that all the records are up-to-date and accurate. They might use software like QuickBooks or Xero. Accountants, on the other hand, use those records to compile, review or audit financial statements. They also advise businesses on financial planning and tax strategy.
Both accounting and bookkeeping are important for keeping a business running smoothly. While accounting firms can offer comprehensive services, accounting and bookkeeping are two different price ranges. Hiring a qualified accountant is much more expensive than a bookkeeper and for good reason, their knowledge and training.
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Can a Bookkeeper Become an Accountant?
A bookkeeper can become an accountant with the right training. Many bookkeepers have the basic accounting skills needed to make the transition to becoming an accountant. With additional training, a bookkeeper can learn accounting and develop more advanced skills. They probably understand debit, credit, journal entries and accountants but they will need to bridge the gap with GAAP accounting principles and more complex accounting topics. Plus accountants are well-rounded in tax, audit and bookkeeping.
Bookkeepers are often just specialized in preparing books and records. It would take quite a few college classes to go from bookkeeping (an associate degree) to an accountant (often a bachelor’s degree).
Why Do Accountants Have to Do Bookkeeping?
In the past, many businesses hired bookkeepers to keep track of their finances. However, in recent years, there has been a lack of bookkeepers available and accounting firms offer comprehensive solutions for businesses. As a result, many businesses have turned to accounting firms to do their bookkeeping. There are several reasons for this.
First, it is more convenient for businesses to have one person handle both their accounting and bookkeeping needs. This saves them time and money. Second, many businesses require like that an accounting firm can be a one-stop shop for bookkeeping and accounting services once tax time rolls around.
Overall, the main reason why accountants have to do bookkeeping is that clients ask. Not often, accountants turn down new business if they have some bookkeepers on staff.
Is Bookkeeping Hard?
Generally speaking, bookkeeping is not hard. You need some training to become a bookkeeper, but any accountant can do it. Accountants pretty much cover bookkeeping in a four-year accounting degree. The main thing you need to know is how to keep track of your finances and understand the basic accounting principles. Once you have that down, bookkeeping is relatively easy. From there, it is just learning online software like QuickBooks. QuickBooks is easy for individuals to understand even if they are new to doing their own bookkeeping.
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Should You Use an Accountant for Bookkeeping?
If you are thinking about using an accountant for your bookkeeping, you may want to ask them first. They may refer you to a bookkeeper that can help you with your specific needs or they may have an in-house bookkeeper.
An accountant can offer helpful advice when it comes to bookkeeping for your business. They may be able to recommend a bookkeeper that is a good fit for you and your business. Are you looking to start an e-commerce business? How about a construction company? While a single bookkeeper can probably do both, wouldn’t it be great to ask your accountant if they know a bookkeeper specialized in your type of business. It only takes a few minutes and you could get a good referral.
Do Small Businesses Need a Bookkeeper or Accountant?
It’s no secret that small businesses need to keep track of their finances. But what’s the best way to do that? Should you hire a bookkeeper or an accountant?
The answer is usually both. A bookkeeper can handle the day-to-day tasks of recording transactions and keeping track of receipts. An accountant can provide advice on tax strategy, prepare your taxes and provide an audit as long as they are independent of the business.
Finding a firm that does both bookkeeping and accounting can be the way to go. They will have everything in-house to service your business’s needs.
Do Accountants Do Bookkeeping? Final Thoughts
Most accountants do bookkeeping, either for their firms or for their clients but it isn’t their primary task. Bookkeeping is an essential part of the accounting process and sometimes it is just unavoidable by accountants. Without accurate and up-to-date bookkeeping records, accountants can’t file taxes or audit businesses. Bookkeeping and accounting are both needed for a successful business!
