As a bookkeeper, you will verify and balance receipts, keep track of cash drawers, and check sales records. Bookkeepers also deposit money, cash checks, and ensure correct credit card transactions. They look at all of the financial details of a company so they can make larger decisions about how the business operates. Bookkeepers need a strong grasp of all financial details in the company so they know if there are any inconsistencies.
- While many small businesses hire an accountant as a consultant, you have several options for handling financial tasks.
- That’s why it’s not a bad idea to hire a bookkeeper first to get those services at a minimum and then hire an accountant later to just handle the taxes.
- All these career paths often start with the same type of education, with many accountants pursuing a Bachelor of Science in Accounting degree.
- Bookkeepers do not have the training or certifications to work as accountants, and accountants do not usually have the experience or software knowledge to function as bookkeepers.
According to the Bureau of Labor Statistics, the median pay for accountants was $77,250 per year ($37.14 per hour). The first thing to figure out is whether you need an in-house bookkeeper or an outsourced one. Typically, businesses hire in-house financial specialists when there’s a lot of payroll and invoices to process. If you’re a small firm that doesn’t do a great deal of payroll, you can start by outsourcing bookkeeping services to someone who would update your books, ideally every month. A bookkeeper is likely to be employed at a smaller company or organization and will process a large volume of routine transactions. An accountant is likely to be employed at a larger company and will be able to delegate the processing of the high-volume routine transactions to accounting clerks.
Pathways to a bookkeeping career
Bookkeepers play a vital role in managing financial records, while accountants offer valuable expertise and financial advice. Depending on your needs, you may want to consider working with both a bookkeeper and an accountant. While accounting is similar to bookkeeping in that it involves documenting business financial transactions, the former process is more in-depth.
- The biggest difference between the two is the educational background, certification, and licenses.
- CPAs also need to keep their certification current, so they’re often up to date on important tax law changes.
- Both disciplines work hand in hand to determine the financial health of a business.
- While these requirements may sound tedious, they could benefit your career in the long term.
- The highest-paid bookkeepers were the 460 working for the US Postal Service, who earned $59,150 in average annual income.
All small-business owners should consider hiring a professional accountant to handle their tax returns, at the least. When it comes to bookkeeping, some business owners choose to manage those tasks themselves. You may not mind balancing the books and handling financial transactions, and software like QuickBooks Online, FreshBooks and Xero can automate a significant amount of this work. But as your business expands, bringing on a bookkeeper can alleviate your workload and free up your time to devote to other areas of the business. Additionally, there are stricter requirements to become a certified public accountant (CPA).
As a business leader, you should have a good idea of which professionals best suit the needs of your company. As such, it’s important to know whether you need a bookkeeper or an accountant to keep track of your affairs. Public accounting generally pays the most to a candidate right out of school. In particular, the big four firms of Ernst & Young, Deloitte, KPMG, and PricewaterhouseCoopers offer larger salaries than mid-size and small firms. Depending on the city, you can expect to earn between $40,000 and $60,000 your first year as a Big Four accountant.
Bookkeeping is the daily financial tracking of all of your daily financial transactions. The bookkeeper of a business might choose to use online bookkeeping software to track everything. Caryl Ramsey has years of experience assisting in different aspects of bookkeeping, taxes, and customer service. She uses a variety of accounting software for setting up client information, reconciling accounts, coding expenses, running financial reports, and preparing tax returns. She is also experienced in setting up corporations with the State Corporation Commission and the IRS. The rate an accountant or bookkeeper charges depends on several factors.
How Can a Bookkeeper Become an Accountant?
Another key responsibility for accountants includes conducting routine audits to ensure that statements and the books are following ethical and industry standards. As your business grows, it’s important to invest in professionals who can keep your accounting system on track, free up your time, and help you make better decisions for your business. The annual wage in May 2021 for bookkeepers ranged between $29,120 and $61,980, according to BLS.
The accounting cycle explained
The differences between accounting and bookkeeping start with the educational requirements. Most importantly, expected salary, growth prospects and additional career opportunities are different for accountants than for bookkeepers. A bookkeeper can become an accountant if they have the required education and certifications. The expected job decline is primarily due to cloud computing and other software innovations automating bookkeeping tasks that a person would normally do.
Bookkeepers don’t necessarily need higher education in order to work in their field while accountants can be more specialized in their training. 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. Still stumped on how to handle bookkeeping vs. accounting tasks for your small business?
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An additional 23,650 highly paid accountants averaged $90,560 working for the federal government. The highest-paid bookkeepers were the 460 working for the US Postal Service, who earned $59,150 in average annual income. The 4,160 bookkeepers in the cinema and video industries came in second place, receiving average annual pay of $46,840. The differences between Bookkeepers and Staff Accountants can be seen in a few details.
What’s more, a bookkeeping certification will help you hone your skills and provide more in-depth job training. This also provides a competitive advantage for bookkeepers beginning their careers. Earning a bookkeeping certification involves weeks of studying, hours of test preparation and a significant financial investment. Additionally, maintaining a bookkeeping certification from NACPB or AIPB requires continuing professional development.
The process of maintaining certification can help you keep your skills sharp over time as well. To renew your certification, you must complete continuing coursework, attend professional development programs and take part in training workshops. While these requirements may sound tedious, they could benefit acid-test ratio definition importance calculation and example your career in the long term. Additionally, your employer might be inclined to promote and offer higher salaries to certified bookkeepers. Demonstrating a high level of proficiency can reassure employers that you’re equipped to take on greater responsibility, significantly raising your earning potential.
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