Accounting and bookkeeping are critical aspects of a business’ financial management, and these terms are often used interchangeably. However, these terms differ, and bookkeepers and accountants play varying roles in an organization. For most companies, they work alongside each other and are jointly responsible for ensuring their financial well-being and management.
Simply stated, bookkeepers are more involved in financial administration, and their role is primarily to record financial transactions. Accountants, on the other hand, have a more analytical role and are responsible for providing strategic and actionable insights based on the data they get from bookkeepers.
But this is merely scratching the surface. Let’s take a deep dive to understand the difference between the role of a bookkeeper and an accountant.
Difference Between Bookkeepers and Accountants
When it comes to bookkeepers, their job revolves around a lot of minute yet important accounts-related tasks. So, attention to detail is one of the primary needs to be a good bookkeeper. In contrast, accountants are responsible for creating financial statements using bookkeeping inputs and periodically reviewing and analyzing the financial information that gets recorded.
Here are the key differences between a bookkeeper and an accountant –
| Basis of Difference | Bookkeeper | Accountant |
| Primary functions | ● Maintains a record of financial transactions chronologically ● Manages Ledgers ● Creates categories for managing financial transactions ● Is responsible for ensuring the accuracy of financial data entry ● Reconciles accounts | ● Undertakes financial analysis and review of the company’s books of accounts ● Prepares financial statements and budgets ● Prepares financial forecasts ● Analyses books of accounts |
| Potential additional duties | ● Management of account receivables ● Management of accounts payable | ● Conducts audits ● Advises management on financial and other important matters ● Prepares financial statements in compliance with regulations |
| Interaction with other departments and offices | ● Provides financial data to the accountant ● Can get in touch with other departments to verify any related transactions | ● Works in tandem with the bookkeeper to prepare financial documents ● Works with management to strengthen the financial performance of the organization |
| Career Requirements | ● Individuals with basic mathematics and accounting skills can apply to be bookkeepers ● Availability of certifications – Yes ● Are they required compulsorily – No | ● A professional degree in accounting is mostly required ● Preference is given to experienced professionals |
What is a Bookkeeper?
A bookkeeper’s role is of finance personnel who is responsible for managing a specific set of tasks relevant to a business’ day-to-day financial management. The primary job of a bookkeeper is bookkeeping, which refers to the formal process of maintaining all the financial records of a business, such as daily transactions, in a single database. So, their job, even though it requires specific skills and knowledge, doesn’t demand any formal education.
Thus, a B.Com graduate with an Honors degree in Accounts can apply for a bookkeeping position in India. The businesses hiring them provide beginners with the necessary tools, or these individuals undertake additional courses to be eligible to become bookkeepers.
What is an Accountant?
An accountant is a specialized financial professional responsible for preparing financial statements, such as tax documents and final accounts, and handling financial structuring and analysis.
Accountants in India usually are the CAs (Chartered Accountants) and individuals with M.Com and CMA degrees. The higher-level education prepares these individuals to handle the nuances of their jobs and teaches them standardized methods and ethical requirements necessary to succeed. Many businesses, especially those with multiple accountants, also hire non-certified accountants who have years of experience in this field. Still, they must have at least one certified accountant responsible for managing their finances.
Duties
Bookkeeper Duties
In the past, bookkeepers managed a general ledger manually, recording every financial transaction, such as sales, purchases, and expenses. Today, most have shifted to digital ledgers, which are automated and have curbed the monotony of the job profile. So, the duties of a modern bookkeeper today revolves around ensuring financial transactions are recorded and posted to their respective ledgers properly and managing payroll and invoice generation.
Also, read – Duties of a Bookkeeper
Accountant Duties
The accountants build on from where bookkeepers offload most of their duties and thus, their role is more complex. The accountants analyze financial numbers, generate reports, and present an overview of the business’ financial and overall performance. They are also responsible to enter adjusting entries and conducting financial audits.
Also, read – Duties of an Accountant
Education and Certification Needs
For Bookkeepers
Bookkeepers, in most cases, need a basic college degree like that of a graduate to begin their professional journey. Most MSMEs are happy to hire them out of their college (B.Com), but big organizations may require some sort of professional degree or years of proven experience. Individuals often opt for a Diploma in Finance & Accounting to increase their chances of getting hired.
Bookkeepers often start working with small businesses and gain experience over the years to rise up the ladder. They also undertake professional degrees to strengthen their financial knowledge and increase their chances of getting hired by a honcho.
For Accountants
For those looking to become accountants, they have to strive harder than bookkeepers in terms of education as they need specific educational qualifications and professional certifications. Here are some popular degrees that would make you eligible to apply as an accountant for a business –
CA (Chartered Accountancy)
Chartered Accountancy (CA), a course offered by The Institute of Chartered Accountants of India (ICAI), is one of the most prestigious certifications in the country. Having global recognition, this course is designed to develop experts in taxation, accounting, auditing, and financial management.
Company Secretary (CS) (for Corporate Accounting & Compliance)
Offered by The Institute of Company Secretaries of India (ICSI), the Company Secretary course focuses on corporate governance, compliance, and financial regulations. CS professionals, even though they primarily handle corporate and legal affairs, are also known to have expertise in accounting, taxation, and corporate regulatory compliance.
MBA in Finance / M.Com (for Corporate & Management Accounting)
An MBA in Finance, unlike a CA or CMA, is a postgraduate degree that emphasizes more on developing the managerial skills of the students. This course focuses on providing expertise in financial management, investment strategies, risk assessment, and corporate finance and usually lasts two years. Students who have an MBA in Finance can apply for leadership roles in finance and accounting.
Can Bookkeepers and Accountants Operate Together?
Businesses, especially small ones, often feel that their limited size (and also to save costs) warrants them hiring only an accountant and leaving the bookkeeper position vacant. Many end up leaving bookkeeping tasks incomplete or poorly managed. This often forces the accountant to first do the groundwork before taking on higher-level accounting duties.
Companies can do better. They can instead work with a quality bookkeeper and an accountant to set best practices and an open communication channel to ensure they perform to their potential. Understanding and delegating these roles sensibly can ensure that your organization is the one benefitting at the end of the day.
Wrap up
Accountants and bookkeepers today weave a partnership to ensure the financial and overall success of a business. The accuracy of the bookkeeper and their efficiency in managing the books, coupled with the smart financial management and filing of the accountant, contributes handsomely to long-term success and well-being.
The introduction of capable accounting software has also enabled a lot of MSMEs to go alone by hiring only an accountant. But that comes with its set of challenges and entities have to ensure that they do an impeccable job in recording the transactions to ensure the accounting professional does not feel the need of a bookkeeping partner.
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