You’ll often find the terms ‘bookkeeper’ and ‘accountant’ used interchangeably, a trend which is perhaps understandable outside the field of accountancy. But to a business owner hiring someone to look after their company’s finances, the distinction between the two roles is a crucial one.
Part of the reason many believe the roles of a bookkeeper and an accountant to be the same is that there is a level of crossover between the two roles. As bookkeeping involves keeping complete and accurate records of a business’ financial transactions, it is the first stage of any successful accounting process.
A bookkeeper’s role is essential in allowing a business to run efficiently through recording payments and receipts, as well as ensuring that the correct amounts are paid and received on time. Other bookkeeping tasks include the issuing of invoices and recording of cash receipts from customers, recording invoices from suppliers and making payments to them, recording inventory, and the processing of petty cash and payroll transactions. For very small businesses, this may be enough to fulfil their accounting needs.
However, as stated earlier, bookkeeping is just one part of accounting. It involves financial transactions to be recorded and handled properly, but doesn’t require any analysis on the bookkeeper’s part. This is where accountancy comes in. An accountant takes the information from the bookkeeping process and assesses the overall financial picture. This includes analysis and interpretation of the records, forecasting the business’ financial position, and evaluating how efficiently the business is running.
Accountancy can also become a much more specialised role than bookkeeping. An accountant might choose to specialise as an accountant in the financial, management, tax or auditing fields, amongst others.
As such, an accountant will hold more specialist qualifications than a bookkeeper, as their role is the more complex of the two. Many businesses will expect their accountant to fulfil bookkeeping duties as part of their role, although larger businesses will often employ people in separate bookkeeping and accounting roles in order to allow the accountant to focus on the analysis and interpretation of the business’ finances.