Is Bookkeeping Different from Accounting?

Although both accounting and bookkeeping are responsible for recording and maintaining a business’s financial records, there are subtle yet essential differences between the two.

Bookkeeping primarily focuses on recording day-to-day financial transactions, while accountants take a more holistic view of a business’s finances. Both careers require similar skills and attributes, but the educational requirements, typical starting salaries, and job outlooks differ significantly.

If you are good with numbers and detail-oriented, a career in accounting could be a good fit for you. Accountants work with financial details all day long, so it is important that they are able to handle simple calculations and have a general understanding of math. There are opportunities for accountants in many industries, including law, insurance, health care, and small business.

As an accountant, you will often have to crunch numbers. However, this is not the only skill needed. It is important to also possess sharp logic skills and the ability to solve problems on a larger scale.

While bookkeepers make sure that the small details are accounted for, accountants use those same details to come to broader and more significant conclusions. A few of the key tasks for accountants include tax return preparation, conducting routine reviews of various financial statements, and performing account analysis.

Another responsibility for accountants includes conducting routine audits to ensure that statements and the books are following ethical and industry standards. In addition, accountants may also be responsible for providing advice to clients on financial planning and budgeting issues.

Bookkeepers play an important role in keeping financial records accurate and up to date. They are responsible for recording journal entries and conducting bank reconciliations, and must be able to shift focus easily to catch tiny, hidden mistakes in a budget or invoice. Many bookkeepers work as consultants, taking on a few jobs for various clients.

Some bookkeepers are promoted to accounting positions even if they lack the preferred level of education for the company. You can become a bookkeeper right out of high school if you show that you are good with numbers and have strong attention to detail.

Educational Requirement

While both accountants and bookkeepers need a college education, not every job requires one. As mentioned before, some bookkeepers may only need a high school diploma, but this depends on the employer. In some cases, bookkeepers may hold an associate degree.

If you want to pursue a career in accounting, you may benefit from becoming a certified public accountant (CPA). This designation is a common goal for many accountants, and it requires a minimum of 150 postsecondary education hours. Most CPA candidates go ahead and finish their master’s degrees.

Bookkeepers often start their careers working for small businesses, gaining valuable experience before going back to school for a degree in accounting or finance. Enrolling in one of the best online bookkeeping classes is a great way for those interested in this career to supplement their existing financial knowledge.

Outlook

There are significant differences in job growth and salaries between accountants and bookkeepers. Accountant jobs are expected to grow in the next several years, while bookkeeping jobs are expected to decline. Job growth for accountants should track fairly closely with the broader economy, but bookkeepers will face pressure from automation and technology that will reduce the demand for such workers.

Skills and Qualifications

If you are not a fan of math and you find numbers confusing, then a career in accounting or bookkeeping might not be for you. These professionals work with financial data all day, so it is important that they enjoy working with numbers and are good at making calculations.

As a bookkeeper, your attention to detail is crucial. Small mistakes can lead to bigger problems down the road if they are not caught early. You must be able to balance multiple tasks at the same time. A typical day for a bookkeeper involves working on several smaller projects instead of one large one.

Bookkeepers need to be able to learn new technology quickly, as nearly all bookkeeping is done using computerized accounting software. Bookkeepers should be proficient in using different accounting software programs in order to be able to do their job properly.

As an accountant, it is essential to possess sharp logic skills and the ability to solve problems on a larger scale. While bookkeepers are responsible for making sure that the small details are in place, accountants use those small details to come to much broader conclusions about a company’s finances.

Key Takeaway

People often confuse bookkeeping and accounting, and with good reason. While there are certain similarities and overlaps between the two, there are also distinctions that set them apart. Bookkeepers don’t necessarily need higher education in order to work in their field, while accountants can be more specialized in their training.

Another difference between them are their pay scale. Because bookkeepers tend to work for smaller companies, they may not be paid as much as accountants. Knowing the differences between the two can help people find their niche in the industry and can give guidance to companies on who to hire for their needs.