Differences Between Bookkeeping and Accounting (2024)

FAQs

Differences Between Bookkeeping and Accounting? ›

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.

Top 8 Differences between Bookkeeping and Accounting

In the simplest of terms, bookkeeping is responsible for the recording of financial transactions whereas accounting is responsible for interpreting, classifying, analyzing, reporting, and summarizing the financial data.

Bookkeepers and accountants sometimes do the same work, but have a different skill set. In general, a bookkeeper's role is to record transactions and keep you financially organized, while accountants provide consultation, analysis, and are more qualified to advise on tax matters.

Accountants have higher salary and growth expectations than bookkeepers. To maximize earning potential and secure long-term job stability, it's worth pursuing a career as an accountant. According to leading labor market analytics firm EMSI, the median annual salary for a bookkeeper is $42,411.

Bookkeepers and accountants share the same long-term goal of helping your business financially thrive, but their roles are distinct. Bookkeepers focus more on daily responsibilities, like recording transactions, while accountants provide overarching financial advice and tax guidance.

Salaries are typically based on education, certification, years of experience, credentials, industry or employer, job description, location, and complexity of work. According to the U.S. Bureau of Labor Statistics for 2021, the national average salary for bookkeepers was $45,560 and for accountants was $77,250.

Bookkeeping is a part of, and one of the first steps in, the accounting process. It involves managing and recording the day-to-day financial transactions of a business.

No, a bookkeeper doesn't need more accounting skills than an accountant. Both roles involve different aspects of financial management and require different skill sets and expertise.

Bookkeeping is a direct record of all purchases and sales your business conducts, while accounting is a subjective look at what that data means for your business and cash flow strategies. An accountant can be considered a bookkeeper, but a bookkeeper can't be an accountant without proper certification.

"A bookkeeper records the financial transactions of an organization and takes care of day-to-day functions such as recording sales and invoices, paying bills and processing payroll," Stephens said. "Accountants take the financial data and analyze it to help organizations make financial decisions."

Is a bookkeeper cheaper than an accountant? ›

Bookkeeper rates are typically more cost-effective than accountant rates. This is, in part, because accountants have a higher level of education and expertise regarding business finances and forecasting.

Many bookkeeping professionals agree that their profession does not require any supernatural skills. As far as newcomers to the accounting industry are concerned, they certainly have a hard time at first. Yet, the same can be said about any other profession. All skills and abilities come only with time and experience.

Related Careers

Accountants take bookkeeping one step further by performing audits, preparing taxes, and providing forecasts to the business owner. They educate the business owner to help them understand how their financial decisions could impact their business.

Bookkeeping Salary and Job Growth Potential

The BLS projects employment for bookkeeping, accounting and auditing clerks to decline by 6% by 2032. Even so, the BLS projects an average of 183,900 openings for bookkeeping, accounting and auditing clerks.

You don't need accounting qualifications but some level of knowledge can't hurt, especially when you're often the messenger between the business owner and their accountant.

This can include everything from payroll services to helping with end of year reconciliation. In addition to helping record transactions, a bookkeeper can help prepare financial statements so an accountant can interpret and provide feedback.

The three golden rules of accounting are (1) debit all expenses and losses, credit all incomes and gains, (2) debit the receiver, credit the giver, and (3) debit what comes in, credit what goes out. These rules are the basis of double-entry accounting, first attributed to Luca Pacioli.

There are 5 major account types in the CoA: assets, liabilities, equity, income, and expenses.

What are the types of accounting methods? There are two primary methods of accounting— cash method and accrual method. The alternative bookkeeping method is a modified accrual method, which is a combination of the two primary methods.

Here's a simple way to make sense of it: bookkeepers are focused on the minutiae, laying the financial groundwork by recording numbers and data. Then, accountants easily step in and use that data to offer big-picture insights and strategic recommendations to help your business grow.