While some entrepreneurs mentally lump bookkeepers in with accountants and file them away until they’re needed, many business owners are beginning to wonder the same question we’re frequently asked at Tantelo: What’s the difference between a Bookkeeper and an Accountant?
While Bookkeepers share common goals with Accountants, each profession focuses on different stages of the financial cycle and takes care of different functions. If you happen to be in the process of setting up a financial team for your business, it’s time to understand the real difference between bookkeeping and accounting.
Bookkeeping and Accounting, Defined
Bookkeeping (definition): The process of recording daily transactions for a business or sole proprietorship in a consistent manner with the goal of creating a strong business foundation, financial accuracy, and ease of organization come tax-time. The process of bookkeeping is largely objective, and is based primarily on transactions.
The most common functions of a bookkeeper include:
Recording ongoing financial transactions of the businessPosting debits and creditsProducing invoices for accounts receivablesCompleting payroll for employees
While the complexity of the bookkeeping process generally follows the size of the business, you can see that having a bookkeeper is essential to remain on-top of your business’ ongoing financial duties.
Accounting (definition): A high-level process that interprets previously compiled information to produce financial models. The process of accounting is more subjective than bookkeeping.
The process of accounting includes functions such as:
The preparation of a company’s financial statements
Preparing adjusting entries that have occurred but are yet to be entered
Posting typical accrual entries such as amortization entries, interest calculations, share capital adjustments, and non-cash items
Analyzing a business’ operating costs
Filing income tax returns
A Shifting Landscape
It is important to note that, with ongoing technological advances and more and more accounting software being made available, many bookkeepers have managed to absorb some traditional accounting functions. In modern times, for example, it is not uncommon for bookkeepers to offer financial statements to their clients.
The bottom line?
Accountants are often drawn on for more in-depth analysis of a business’ financial state and major financial dates, like annual tax returns, while bookkeepers are often utilized on a more consistent, ongoing basis to ensure the company maintains a solid financial foundation.
The good news?
At Tantelo, you don’t need to worry about whether a bookkeeper or accountant is best for your business. Our full service team combines bookkeeping and accounting, offering the ideal solution to an outsourced financial team for your small to medium-sized business.
Our services don’t end there, either. Tantelo will manage your ongoing cash flows, and help you track your budget to actuals. Our financing add-ons will assist you in valuating your company when raising investor dollars (for both startups and growing businesses), while our in-house finance team ensures you get the right investor or lender to help your business flourish.
