The difference between a bookkeeper and an accountant is often confusing. Both professions are in the same sector of finance management, however, there are clear distinctions between the two roles.
In this article, we'll break down the main differences between an accountant and a bookkeeper. We'll also identify ways in which their responsibilities are similar, but how both of them can add value to a business.
It's easy to understand why some people feel confused between the difference between an accountant and a bookkeeper. This confusion is partly due to their shared focus on financial data and the production of formalised records.
Both an accountant and a bookkeeper must also have a similar level of expertise. This level of knowledge is required due to the complicated and formal paperwork that they produce. However, significant differences exist, and there are some rules which can be applied to identify these fundamental differences.
By definition, bookkeeping is concerned with financial transactions and their correct identification, measurement and recording; all aspects which are becoming more straight-forward thanks to modern financial automation. Accounting relies upon those records to interpret, summarise and gathering data into crucial commercial insights.
Bookkeeping exists to ensure that every transaction in the business is recorded systematically, according to transparent processes and the law. Accountants then interpret this information and translate it simply for numerous stakeholders - from the business owners through to the tax authorities.
Bookkeepers do not prepare financial statements; only daily ledgers to record transactions. It is the accountant who prepares a company's financial report.
Bookkeeping requires an understanding of specific functions which accountants generally may not understand. Many bookkeepers will understand basic accounting. Accounting, on the other hand, is highly complex and analytical, therefore requiring specialised skills and qualifications.
Often, there is both an accountant and a bookkeeper in a business's finance team. In many cases, bookkeepers are managed by accountants. Accountants will usually have higher level qualifications, combined with significant experience. They may achieve professional status, such as Chartered Accountant.
As technology becomes more advanced, the roles of accountants and bookkeepers are starting to merge. Automated software is increasingly replacing the purpose of manual bookkeeping, and sophisticated systems are now generating the financial statements that both roles produce.
Innovative accountants and bookkeepers are embracing technology, using it to streamline their processes and make their tasks more accurate. Thanks to the complexities of their professions, however, it is unlikely that accountants and bookkeepers will become entirely replaced by technology any time soon. Instead, they will be able to use their in-depth knowledge to advise business owners as to what tools are best to use, and how to use them.
Expense management is one particular area where technology is pushing innovation. Soldo provides a solution for businesses who are wanting to make their expense management process as simple as possible. Find out more here.