It is not only important for a business owner to understand the difference between a bookkeeper and an accountant but also to recognize their qualifications.
Usually, a bookkeeper is needed to have around two to four years of working experience or a degree. To be experts in their job, bookkeepers require being accurate and knowledgeable about the essential financial matters. The work of a bookkeeper is supervised by either a small business owner or an accountant whose books they are working on.
Functions of bookkeepers are:
- To record financial transactions
- To post debits and credits
- To producing invoices
- To maintain and balance general ledgers, subsidiaries, and historical accounts
- To complete payroll
One of the major components of bookkeeping is to maintain a general ledger. The ledger is a document in which a bookkeeper records the amounts from sales and expenses receipts. In a ledger, transactions are posted and with increasing sales, ledger posting increases. A ledger can be made with a computer spreadsheet, specialized software or simply a sheet of paper.
To be eligible for the title of an accountant, an individual should have an accounting bachelor’s degree. For those who do not have a formal degree in accountancy, a degree in finance is usually considered sufficient. Unlike bookkeepers, accountants are also qualified to gain additional certifications.
For example, an accountant with adequate education and experience can earn the title of a Certified Public Accountant (CPA), which is one of the most popular types of accounting title. To become a CPA, an accountant has to pass the Uniform Certified Public Accountant exam and obtain the experience as a licensed accountant.
Functions of accountants are:
- To preparing and adjust entries
- To prepare financial statements of the company
- To analyze costs of operations
- To complete income tax returns
- To aid the business owner to understand the impact of financial decisions
Accounting produces reports which will help identify main financial indicators. The outcome is awareness of real profitability and an understanding of cash flows in business. Accounting shifts the data from the ledger to statements that help reveal the larger picture of the company, and the track the business is improving on. Business owners frequently turn to accountants when in need of help with financial forecasting, strategic tax planning, and tax filing.
Learn more on how miplly’s bookkeepers can help organize your books.