What’s the Difference Between Accountants and Bookkeepers?

Bookkeeping vs. accounting

Bookkeeping is a transactional and administrative role that handles the day-to-day tasks of recording financial transactions, including purchases, receipts, sales and payments. Accounting, on the other hand, provides business owners with reports and financial insights based on information gleaned from bookkeeping data.

“Bookkeeping is designed to generate data about the activities of an organization,” explained D’Arcy Becker, an accounting professor at the University of Wisconsin-Whitewater. “Accounting is designed to turn data into information.”

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Consider the following at-a-glance comparison of bookkeeper and accountant roles: 

What does a bookkeeper do?

Bookkeepers maintain complete records of all money entering and leaving the business. They record daily transactions consistently and legibly to help accountants perform their functions. Generally, an accountant or business owner oversees a bookkeeper’s work.

Typical bookkeeping tasks include the following:

• Recording financial transactions
• Posting debits and credits
• Creating invoices
• Managing payroll
• Maintaining and balancing ledgers, accounts and subsidiaries

General ledger management is a crucial part of a bookkeeper’s job. A ledger is a record of sales, expense receipts and other financial transactions. Ledgers vary in complexity from a sheet of paper or spreadsheet to specialized bookkeeping and accounting software.

What credentials does a bookkeeper need?

Bookkeepers must have basic knowledge of financial topics and accounting terms and strive for accuracy. While certification isn’t required, accreditation and licensing are available from the American Institute of Professional Bookkeepers (AIPB) and the National Association of Certified Public Bookkeepers (NACPB):

• AIPB: AIPB certification requires bookkeepers to have at least two years of full-time work experience and pass a national exam. To maintain the credential, bookkeepers must engage in continuing education.
• NACPB: The NACPB offers credentials to bookkeepers who pass tests in small business accounting, small business financial management, bookkeeping and payroll. It also offers a payroll certification, which requires additional education. To earn the Certified Public Bookkeeper license, bookkeepers must have 2,000 hours of work experience, pass an exam and sign a code of conduct. To maintain their license, they must take 24 hours of continuing education each year.

A bookkeeper with professional certification demonstrates a commitment to the trade. They show they have the necessary skills and are willing to continue learning new methods and techniques.

What does a bookkeeper charge?

Bookkeeper rates vary widely depending on the services a business needs, the bookkeeper’s expertise and the local market:

• Services: Services and in-office time affect bookkeeping costs. For example, if you need someone to reconcile the books once a month, you’ll pay less than if you want to hire someone full-time to handle day-to-day operations. Consider the tasks you want a bookkeeper to perform and estimate how long it will take to complete them. Decide if hiring someone full-time, part-time or on a project basis makes sense.
• Expertise: If you have complex books or a high sales volume, you’ll want to hire a certified or licensed bookkeeper. An experienced bookkeeper will cost more, but it can give you peace of mind and confidence that your finances are in good hands.
• Local market: Your business’s location may influence bookkeeping rates. For example, if you live in a high-wage state like New York, you’ll pay more for a bookkeeper than in South Dakota. According to the Bureau of Labor Statistics (BLS), the national average salary for bookkeepers in 2023 was $47,440 or $22.81 per hour. Expect to pay significantly more for a nonemployee bookkeeper.

What are the advantages of a bookkeeper?

Bookkeepers can bring your business the following advantages: 

• Bookkeepers keep finances organized: Bookkeepers can help you track and organize your financial documents and reports. If you hire an accountant at some point, your bookkeeper’s detailed, compiled records will likely save you money in accountant fees.
• Bookkeepers are affordable: Bookkeepers typically charge lower fees for their services than accountants. While amounts vary according to your filing and documentation needs, your business will likely be able to find an affordable bookkeeping professional. 
• Bookkeepers provide straightforward data: While accountants provide detailed analyses, bookkeepers can provide a straightforward look into a business’s financial standing. 

What does an accountant do?

An accountant analyzes the financial data a bookkeeper records and provides business owners with crucial insights and financial advice. Typical accountancy tasks include the following:

• Verifying and analyzing data
• Generating reports, such as tax returns, income statements and balance sheets
• Performing audits
• Providing information for financial forecasts, business trends and growth opportunities
• Helping business owners understand the impact of financial decisions
• Making adjusting entries

Accountants examine the big picture, produce reports and provide a snapshot of where a business’s finances stand. This information helps business owners make informed decisions about their company’s future. 

What credentials does an accountant need?

Accountants typically earn a bachelor’s degree from an accredited college or university, but their qualifications vary by experience, licenses and certifications.

Several accounting certification programs help accountants expand their skill sets and demonstrate expertise, including the following: 

• Certified public accountant (CPA) credentials: CPAs are accountants who have met their state’s requirements and passed the Uniform CPA Exam. This challenging exam tests knowledge of tax law, business law, governmental accounting, auditing and standard accounting practices. CPAs must also meet ongoing education requirements to maintain their accreditation. CPAs often concentrate on different areas, such as auditing or tax preparation. 
• Chartered Financial Analyst (CFA) credentials: Awarded by the CFA Institute, the CFA certification is one of the most respected designations in global accounting. This program teaches accountants about portfolio management, ethical financial practices, investment analysis and global markets. To complete the program, accountants must have four years of relevant work experience. CFAs must also pass a challenging three-part exam. Hiring a CFA means bringing highly advanced accounting knowledge to your business.
• Certified Internal Auditor (CIA) credentials: A CIA is an accountant certified in conducting internal audits. To receive this certification, an accountant must pass the required exams and have two years of professional experience. CPAs can perform some of the same services as CIAs. However, you might hire a CIA for a more specialized focus on financial risk assessment and security monitoring processes.

What does an accountant charge?

According to BLS data, the median salary for an accountant in 2023 was $79,880 per year or $38.41 per hour. However, accounting firms charge substantially more than an accountant’s hourly rate because they must cover overhead costs and nonbillable time. Other factors that affect rates include an accountant’s experience, your state and the complexity of your accounting needs.

Accountants may quote a client a fixed price for a specific service or charge a general hourly rate. Basic services could cost as little as $30 an hour, while advanced services could be over $100 per hour.

What are the advantages of an accountant? 

Hiring a small business accountant yields significant benefits, including the following:

• Accountants provide comprehensive analyses: An accountant can give you a comprehensive view of your business’s financial state and provide strategies and recommendations for making financial decisions. In contrast, bookkeepers are only responsible for recording financial transactions and performing essential operations like payroll and bank reconciliation.
• Accountants bring impressive expertise: Accountants are required to complete more schooling, certifications and work experience than bookkeepers. They often bring invaluable expertise in areas like taxes and investments.
• Accountants can help with compliance and legal issues: Accountants can compile financial evidence or information to help your business deal with legal and compliance issues. Their tax experience can also help you avoid trouble with the IRS.

Accounting software: An alternative to hiring an accountant or bookkeeper

Not all businesses need, or can afford, the in-depth expertise of a hired accounting professional. If you’re handling accounting yourself or delegating this responsibility to a team member or department, accounting software can help you accurately and efficiently track and manage your business expense reports, invoices, inventory and payroll. 

When choosing accounting software, consider your budget and business accounting needs. Many accounting programs have free versions that cover the basics, such as tracking income or generating financial reports. Trying a free solution can help you test an accounting platform and determine if an investment in a full-featured version is worthwhile.

Other vendors may charge annual or monthly fees and provide advanced features such as recurring invoices or purchase orders. While these services come at a cost, they can maximize the accuracy and efficiency of vital financial management processes.

When to hire a financial professional

If you’re unsure about hiring a bookkeeper or accountant, consider the following three signs that it’s time for an accounting professional:

1. Your business finances are complex: If your business deals with multiple income streams, foreign investments, numerous deductions or other considerations, it’s time to hire a financial professional. Depending on your circumstances, an accountant or bookkeeper can save you untold hours and help you stay on top of crucial matters like payroll, tax deductions and tax filings.
2. You’re spending too much time on accounting: If you’re spending so much time dealing with accounting tasks that you can’t work on growing your business or keeping existing customers happy, you’re doing your enterprise a disservice. You may make more money in the long term if you leave the accounting to the experts and focus on your growth prospects.
3. Your business is experiencing growth: While handling accounting by yourself may make sense when your business is small, if it’s in growth mode, it may be time to hire professional help. Start by contracting with a bookkeeper to balance the books once a month and hiring a CPA to handle your taxes.

Tips for finding a financial professional

Consider the following when looking for accountants or CPAs: 

• Ensure they have a deep understanding of tax law.
• Evaluate their communication skills.
• Ask about their proficiency with your business’s accounting software for smoother collaboration.
• Consider their experience in your industry and understanding of small business needs.
• Contact the American Institute of Certified Public Accountants (AICPA) for CPAs with specific expertise, such as employee benefits or personal finance.

Consider the following if you’re looking for a bookkeeper:

• Decide if you need a certified bookkeeper or if an experienced, noncertified professional will suffice.
• Choose between hiring an independent consultant, a firm or a full-time bookkeeper.
• Ask for referrals from friends, colleagues or your local chamber of commerce.
• Search online networks like LinkedIn for potential candidates.

Should you hire a bookkeeper or an accountant?

If you know you need to hire someone to help with financial management but aren’t sure if you need a bookkeeper or an accountant, consider the following:

Consider hiring a bookkeeper if …

• You need help organizing and staying current with daily recordkeeping.
• You’re struggling to keep up with data entry tasks and are missing opportunities to grow your business. 
• Your budget allows for ongoing financial management at a lower cost.

Consider hiring an accountant if …

• You need help with tax planning and investment decisions.
• You have concerns about tax audits, late payment penalties or obtaining representation for IRS matters. 
• Your business is growing and requires more complex financial oversight.

It is quite common to need the services of both a bookkeeper and an accountant, which is why it is crucial to understand which financial professional performs which tasks. 

Don’t leave your books untended

Accountants and bookkeepers both play vital roles in day-to-day operations, periodic reporting and long-term growth and cash flow planning. To avoid costly financial mistakes, it’s best to work with an experienced financial professional as early as possible. If you prefer to go it alone, consider using accounting software and keeping meticulous records. That way, should you need to hire a professional down the line, they can see the complete financial history of your business and transition seamlessly to the next level.

Sally Herigstad and Tejas Vemparala contributed to this article. Source interviews were conducted for a previous version of this article.