What’s the Difference Between a Bookkeeper and an Accountant (and Which Do I Need?)

What do bookkeepers and accountants do, and which one do I actually need? 

This is a common question because there can be a little overlap between the two, but the reality is they both provide different (but complementary) services.

Let’s break down who does what, and when you might need each. 

What does a bookkeeper do? (Your day-to-day numbers person)

Bookkeepers manage the day-to-day details of your business’s finances. Bookkeeper duties typically include:

• Accurately recording and categorizing all business transactions 

• Reconciling to your business bank and credit card accounts 

• Providing monthly and/or annual internal financial reports (such as profit and loss statements and balance sheets), which can help you understand your business’s financial position, spot trends, and support your tax filings. 

Some bookkeepers provide payroll services as well.

By keeping accurate records and working with you to make timely updates, your bookkeeper helps you build a stronger picture of your business’s finances, which can be the basis for solid financial decision-making. A clean set of books will also help minimize any surprises during tax season.

You’ll work closely with your bookkeeper and touch base frequently to ensure your books are accurate and up-to-date.

If you’d like to dive deeper, you might like: How to Work With a Bookkeeper: Supporting Your Business and Streamlining Your Financial Systems

What does an accountant do? (Your strategic advisor and compliance expert)

Accountants typically support you with higher-level analysis and compliance-related tasks, which can include:

• Preparation of formal financial statements (which may be in accordance with generally accepted accounting principles (GAAP) when required)

• Assurance services, such as reviews or audits of financial statements

• Tax return preparation and filing

• Strategic tax planning 

• Advisory services; for example, guidance on choosing the right business structure (such as an LLC, S-Corp, or C-Corp)

• Financial analysis

Some services require specialized qualifications; for example, assurance services like audits must be performed by a Certified Public Accountant (CPA). Not all accountants have this designation, so be sure that your accountant can meet your business’s needs.

Since accountants take a high-level view of your business’s financial world, they typically rely on you and your bookkeeper to get an understanding of the business’s daily operations.

How do bookkeepers and accountants work together?

Your bookkeeper manages your financial records throughout the year, and your accountant typically uses that information for tax preparation or advisory work. 

If you have both a bookkeeper and an accountant, your bookkeeper is often your accountant’s main point of contact, given their intimate knowledge of your books.

Keeping a clean set of books will help streamline your accountant’s work, which can make services such as assurance and tax preparation more seamless, reducing your accountant’s preparation hours and minimizing any unexpected issues during tax preparation. 

Can my accountant also be my bookkeeper?

Some accountants may offer bookkeeping services, but because of the differences in their roles (and the training required for each), the same person does not usually do them.

That being said, you can ask your accountant if they’ll prepare your bookkeeping, particularly if you don’t have a bookkeeper and prefer not to do your books yourself.  Larger accounting firms may have a bookkeeping department, so although your accountant and bookkeeper are not the same person, they may work together internally. 

If your accountant does do your bookkeeping themselves, there may be some efficiencies when it comes to workflow (for example, they would not need to speak with both you and a bookkeeper). But there are a few drawbacks to this approach:

• Accountants typically prepare your books annually rather than monthly, so you may not have real-time financial insight available throughout the year.

• Your accountant will likely have questions on your financial details, but rather than addressing them as they arise throughout the year, you’d address them all at once. It can be difficult to answer questions about transactions that happened nearly a year ago.

• An accountant’s fees for time spent preparing the books are often higher than that of a dedicated bookkeeper. 

So technically yes, your accountant could also be your bookkeeper, but it’s typically not the most effective or cost-efficient solution.

Which do I need: a bookkeeper or an accountant?

Here’s a simple breakdown of when to for a bookkeeper vs an accountant:

You need a bookkeeper when:

• You don’t have time to keep up with the monthly record keeping yourself

• You feel that you don’t have the timely, accurate financial information you need to make business decisions confidently

• You want to partner with someone who will work with you consistently throughout the year, keeping an eye on your day-to-day finances

You need an accountant when:

• You need tax preparation and filing services 

• You need to prepare formal financial statements (which may be compiled, reviewed, or audited)

• You’re looking for tax planning services, strategic advice, or financial analysis to support your business

Many businesses need both, especially if the business is growing and has (or expects to have) a high volume of transactions. 

Ready to build your financial team?

We would be happy to connect with you and see how we can support your bookkeeping needs. Click here to get started with a free evaluation of your books and identify where we can make the most impact.

Already have a bookkeeper? You may enjoy these posts on making the most of the relationship:

• 6 Questions to Ask Your Bookkeeper to Build Financial Confidence and Clarity

• Pro Tips: Making the Most of Your Partnership With Your Bookkeeper