What Does Your Business Need - A Bookkeeper, or an Accountant?
by Michael Burdick, on Apr 27, 2016
One of the most common questions we get asked is the difference between various industry titles such as bookkeeper and accountant. There are many resources out there that give some great definitions, but we wanted to define them as concisely as possible for your quick reference. There are no hard and fast rules, as many of the terms are used interchangeably, but this is how our experts generally define them and how you can decide which your business needs:
You can think of a bookkeeper as a junior accountant of sorts. You know all those receipts you have lying around? A bookkeeper makes sure those are properly logged in your accounting software so you can manage your expenses and be more prepared come tax time. Aside from data entry, bookkeepers often handle payroll, make bill payments, and handle sales invoices. With a dedicated bookkeeper, you should have more insight into the status of finances at any given point allowing you to budget accurately (more about that here). While bookkeepers may be a small piece of the overall accounting puzzle, they really serve as the foundation.
Summary of a Bookkeeper’s primary responsibilities:
- Log and categorize all transactions in general ledger
- Reconcile bank, credit card, and other account-level financials
- Track money owed to you (accounts receivable)
- Track money you owe (accounts payable)
When do you need a Bookkeeper?
Summary of an Accountant’s responsibilities:
- Verify and check bookkeeper’s work
- Enter complex journal entries (e.g., deferred revenue and accrued expenses)
- Compile financial statements
- Provide business owner with input on impact of financial decisions
- Assist with tax returns
When do you need an Accountant?
You almost certainly do not need an accountant in house. We tend to agree with this article from entrepreneur.com that suggests a good time to hire a full-time accountant is when your business reaches 30 employees, but even then it may not be necessary .