The Difference between Bookkeeping and Accounting

In particular, public accounting firms tend to pay the most to those fresh out of school. The “Big Four” accounting firms – Deloitte, EY, KPMG, and PwC – have offered recent candidates that passed the CPA exam $45,000-$60,000/year as a starting salary. We’ve outlined the key differences between bookkeeping and accounting above. In general, the larger or more complex your business is, the greater the need for both an expert bookkeeper and a certified accountant.

As you can imagine, there are quite a few differences between bookkeepers and accountants, including the level of education each job requires. Bookkeeping focuses on recording and organizing financial data, including tasks such as invoicing, billing, payroll and reconciling transactions. Accounting is the interpretation and presentation of that financial data, including aspects such as tax returns, auditing and analyzing performance. Accounting is for trained professionals who can give a fuller summary of your company’s financial realities.

Advantages of working with an accountant

Generally, while both occupations have common goals and tasks, they support businesses in different ways and at different phases of the financial cycle. Taxes can be complicated territory for anyone— and when you get multiple accounts and business expenses involved, it can easily become a disaster. Having a qualified accountant on hand not only makes tax accounting easier, but it could also mean you get more out of your tax return than if you filed on your own. Communicating financial transactions to other parties is a part of accounting. Despite all this, auditing is a completely different process when compared to bookkeeping.

An accountant takes the bookkeeping information then analyses and reports on that financial data. While bookkeepers take care of the first stages in the process, accountants are involved from the start. Unlike bookkeeping, which is all accounting vs bookkeeping about crunching numbers, accounting is more subjective. Bookkeeping refers to handling the day-to-day tasks of recording financial transactions. You are able to assess your finances, including tax obligations, and make timely payments.

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We’ve listed some of the key differences when it comes to the requirements and job market for each. Accountants, unlike bookkeepers, are also eligible to acquire additional professional certifications. For example, accountants with sufficient experience and education can obtain the title of Certified Public Accountant (CPA), one of the most common types of accounting designations. To become a CPA, an accountant must pass the Uniform Certified Public Accountant exam and possess experience as a professional accountant. These required credentials are a determinating factor in the cost of an accountant. In this guide, we’ll explain the functional differences between accounting and bookkeeping, as well as the differences between the roles of bookkeepers and accountants.