Bookkeeping vs Accounting: What is the Difference?

Other small businesses hire a bookkeeper or employ a small accounting department with data entry clerks reporting to the bookkeeper. Bookkeepers and accountants both work with financial records, but accountants have a higher level of responsibility. Bookkeepers focus on recording daily transactions, such as income and expenditures, and producing reports. Accountants oversee financial records and systems for best practices, efficiency and compliance with the law. They also prepare tax returns and find ways to cut costs and increase profits. As a reflection of their increased responsibilities, accountants earn significantly more than bookkeepers on average.

You can also complete additional certifications to demonstrate your proficiency in advanced subtopics related to bookkeeping. Accountants also need to keep their credentials and education up to date, so there are usually requirements for annual training and courses to keep their skills current. Accountants might perform tasks such as budgeting, analyzing, and planning, but are unlikely to deal with everyday processes of recording transactions.

The Importance of Budget Reports

Check out referrals from trusted nonprofit sources, ask fellow nonprofits which firms they used, and conduct your own research to find potential firms near you. Narrow down the list by comparing services to the list of needs for your nonprofit. Larger firms tend to offer some benefits (e.g., gyms, cafeterias, and daycare) that smaller firms can’t reasonably fit into their budgets. When working in private industry (performing accounting work for a company), there are dozens of different positions available to you. Presently, an entry-level public accountant can expect to make about $57,750, per year. There are a few more factors to consider when determining or projecting a CPA salary.

According to the BLS report on accounting, many colleges offer bachelor’s and master’s degree programs for specific specializations, such as tax accounting or forensic auditing. Other specialties are available through continuing education or professional development courses. For example, accountants could earn a college-level certificate in financial planning if they were interested in long-term investment and financial strategy. FinancePal offers accounting for small businesses so that business owners can get back to handling the other important facets of their business—  like growing profits and keeping customers happy. With integrated management technology, small business owners can check-in on their accounts receivable and payables, as well as access project management and Point of Sale features. Plus, you’ll have access to a dedicated team of bookkeeping and accounting professionals to help you optimize your financial strategy and keep track of your business transactions.

Differences Between Bookkeeping and Accounting

For a long-term career, accounting offers much more upward mobility and income potential. The education required to be competitive in the field is greater, but the payoff down the road can be considerably higher. Some of the key tasks for accountants include tax return preparation, conducting routine reviews of various financial statements, and performing account analysis. Another key responsibility for accountants includes conducting routine audits to ensure that statements and the books are following ethical and industry standards. Unlike careers such as law and medicine, in which state licensing boards determine how much education you need, with accounting and bookkeeping, the companies doing the hiring decide what to require of candidates.

Notably, Texas has two cities (Dallas and Houston) in the top five employers of bookkeeping, accounting, and auditing clerks among metro areas. Bookkeeper salary levels vary by location, based on factors like local labor market conditions and local living costs. In these cases, employers may increase their pay rates to attract the best available candidates. Depending on the employer, bookkeepers may qualify for other forms of compensation, such as performance bonuses. According to BLS, the annual wage range for this profession in May 2021 was $47,970 to $128,970. Average accountant salaries are similar across all specialties, with those working in insurance and finance experiencing marginally higher incomes.

What a small business owner should know: what is bookkeeping?

A CPA is an accountant who has met their state’s requirements and passed the Uniform CPA Exam. They must also meet ongoing education requirements to maintain their accreditation. Each sale and purchase your business conducts must be recorded in the ledger and some items will need documentation. You can find more information on which transactions require supporting documents on the IRS website.

• There are various roles, both internal and external, that can help with the day-to-day as well as the reporting and strategic advisory.
• The biggest difference between the two is the educational background, certification, and licenses.
• Fifty states plus the District of Columbia require accountants to earn 150 credit hours of college education before taking the national four-part Uniform CPA exam.
• Additionally, your employer might be inclined to promote and offer higher salaries to certified bookkeepers.
• When it comes to long-term growth, bookkeepers should look to gain the qualifications needed to become an accountant.

Bookkeepers work with actual finance-related documents like invoices, purchase orders, bills from vendors and so on. They enter these figures into a company’s accounting software, but their role is all about keeping records and not about financial forecasting and other complex accounting functions. Between managing employees, maintaining customer law firm bookkeeping satisfaction, and balancing your personal life, it’s easy to let things slip through the cracks. When it comes to managing finances for your small business, it’s best to have a dual-layer system— and bookkeeping and accounting go hand-in-hand. In order to manage your finances comprehensively, you’ll need to consider the value of both positions.

When you work with our nonprofit bookkeepers and accountants, you’ll have a complete team of trained experts behind you, answering questions and making recommendations to help you succeed. Outsourcing nonprofit bookkeeping and accounting duties to a nonprofit-specific firm like Jitasa. The financial rewards of the CPA credential start out great and get better over time.