Accountants & Bookkeepers: The Big Difference
If you’re outside of the accounting world looking in, there are plenty of aspects that may seem similar or practically the same. One of those aspects includes the type of individuals that work within the accounting industry – more specifically accountants and bookkeepers. Many people believe that accountants and bookkeepers are the same, and while yes, an accountant can be a bookkeeper; however, it doesn’t always go the other way. That being said, what’s the difference? They both work with numbers but their roles, qualifications, and compensation amounts are quite distinct compared to one another.
Primary Differences Between an Accountant and Bookkeeper!
This is the first major difference. If you think that you can just become an accountant without putting in the time, effort, and education then think again. Most accountants come with a four-year degree in accounting from an accredited university or institute. It is physically impossible to practice accounting without a degree and a CPA certification, so if you’re thinking about diving into the field, we suggest that you start prepping now.
On the other hand, becoming a bookkeeper isn’t as difficult but it still requires some form of education. Most companies look for an individual with at least a high school diploma or GED equivalency. Bookkeepers must be able to handle data entry and keep track of numbers while noticing inconsistencies in their company’s financial holdings. Proficiency in Microsoft Excel, Word, and bookkeeping software don’t hurt either.
Now, this is where many individuals become confused. Where accountants are considered financial managers, bookkeeping mostly boils down to data entry and making sure dollar amounts end up in the right place. Accountants are expected to be skilled in every facet of finance in case of an emergency or to see where the company may be headed financially in the near future. Most accountants are also skilled in tax preparation, payroll, auditing, forensic accounting, as well as budgeting and forecasting.
Bookkeepers don’t have to worry about all of these things. They’re job consist of the lowest form of accounting. Bookkeepers basically receive the dollar amounts or transaction reports after or before they’re done. From there, it’s their responsibility to ensure that the numbers are recorded and tracked for future use or reference. Though their responsibilities are not as extensive, they are just as significant.
Pay & Annual Salary
Talk to an accountant and then a bookkeeper. You may be surprised by how differently they’re compensated. When it comes to accountants, they are typically contracted – working within a firm – unless a company has an accounting department of its own. Most contracted accountants charge their clients on an hourly rate but it’s really up to their discretion. In the case of handling taxes, some accountants based their fees on an hourly rate and/or the number of forms prepared. Their annual salary typically ranges from $40,000 to $60,000 for an entry-level position, potentially jumping to $100,000 and up after a few years.
Unfortunately, bookkeepers tend to make less than accountants. Bookkeepers usually work for companies and businesses, meaning they don’t have the luxury of determining their own prices. Most bookkeepers are compensated on an hourly basis. Depending on the company they’re working for, bookkeepers may even be paid a salary. The average salary for a bookkeeper is $25,000 to $40,000. A bookkeeper’s hourly fee is generally less than an accountant’s – even bookkeeping companies charge less of an hourly rate despite doing the same amount of work as an accounting firm.
Want to learn some more differences between bookkeepers and accountants? Discover more at the GBC website and don’t forget to check out our other blogs, news, and articles.