What Are The Differences Between A Bookkeeper And An Accountant?

Regardless of your business’s industry, size, and model, bookkeeping and accounting professionals play an essential role in the financial health of your business. While many people know that a bookkeeper is not the same as an accountant, they can’t put their finger on what exactly differentiates a bookkeeper vs accountant. 

In this guide, you’ll learn what separates an accountant from a bookkeeper, which your business should hire and when to employ them. 

Bookkeeper vs. Accountant: An overview 

A bookkeeper starts and an accountant finishes. In other words, a bookkeeper handles the initial stage of an accounting process which is recording and organizing daily financial transactions. An accountant takes up the work done by a bookkeeper and carries on the remaining tasks of the accounting cycle. Accountants are then responsible for analyzing and interpreting data gathered by bookkeepers, consulting with business owners, and preparing financial reports. 

To look at the differences in detail, we will compare bookkeeper vs accountant in two major aspects: job description and required credentials.  

Bookkeeper vs. Accountant: Job description 

Duties of a bookkeeper:

The practice of bookkeeping is far from new to the human race. Bookkeeping may have existed as early as around 2600 B.C. A bookkeeper’s core duty is to maintain complete and accurate records of the money coming in and out of business in a general ledger. Bookkeepers keep track of daily transactions in a consistent, systematic way, and their records allow the accountants to perform their jobs. 

Apart from the primary task of managing accounting ledgers, there are many other responsibilities that a company would ask from a bookkeeper.

A bookkeeper’s job description typically includes: 

  • Entering and correcting Accounts Payable and Accounts Receivable
  • Reconciling accounts and matching bank transactions
  • Issuing invoices and processing payments 
  • Managing expense reports 
  • Processing payroll 
  • Adjusting entries where necessary and as instructed by the accountant

Besides the above-mentioned typical responsibilities of bookkeepers, their duties vary depending on the industrial environment and business nature. For example, if you own a cannabis business, you may want to look for someone who can use seed-to-sale software (Biotrack, MJ Freeway, METRC, etc.) Or a bookkeeper who knows how to deal with IFTA (International Fuel Tax Agreement) will be an ideal choice for trucking businesses. 

Duties of an accountant: 

 An accountant analyzes the financial data collected by the bookkeeper to provide vital business insights and financial advice to the business owner. Accountants look at the big picture, putting key components of your business’s finances together and presenting them via financial statements. Such reports offer you a clear view of where your finances stand and what they imply, as well as what you can and should do about them and where you may anticipate your company will go in the near future.

The following are a few examples of typical requirements in an accounting job description: 

  • Preparing accounts and tax returns
  • Monitoring business spending and budgets
  • Auditing and analyzing financial performance
  • Administering payroll
  • Compiling and presenting financial and budget reports
  • Providing tax planning services 
  • Providing timely forecasts and important insights for future growth

Accounting work is often office-based, with usual 9 to 5 working hours. However, the workload typically becomes much greater during peak seasons like the tax period and the end of a fiscal year.   

In small businesses, an accountant may undertake all of the activities associated with the accounting process, but in larger businesses, various accountants are often in charge of different accounting areas. This might cover both financial and managerial accounting.

Bookkeeper vs. Accountant: Credentials and licensing 

Requirements of a bookkeeper:

In most cases, bookkeepers don’t need to acquire any certificates to handle the books. Businesses or employers usually only require their bookkeepers to have a high school degree providing basic math, communication, and computer skills. Other necessary skills like time management, organization, and multitasking can also be gained in high school.

While bookkeeping is not a licensed profession, businesses sometimes ask for a certification as proof of expertise. Many big organizations offer accreditation and licensing to bookkeepers, such as the American Institute of Professional Bookkeepers (AIPB) and the National Association of Certified Public Bookkeepers (NACPB).

Software companies for bookkeeping and accounting such as QuickBooks, Excel, Xero offer certifications to highlight bookkeepers’ skills and abilities using these software products. So if your accounting system is heavily dependent on software, a bookkeeper with a sophisticated understanding of accounting-support programs should be your best option. That’s when these software certifications can help you. 

Requirements of an accountant:

Although not always mandatory, an accountant needs to obtain at least a bachelor’s degree in accounting or related fields like business, economics, finance, or management. 

In addition to a university degree, an accountant can earn advanced accounting certificates to demonstrate their competency, such as a CPA certificate. A CPA is a “certified public accountant” who has satisfied the state’s standards and passed the Uniform CPA test. They must also meet continuing education criteria to keep their certification. 

When interviewing for a CPA, seek someone knowledgeable about tax law, proficient in accounting software and with excellent communication skills. They should be familiar with your sector as well as the unique demands and expectations of small enterprises.

When to hire a bookkeeper vs. an accountant

If your business is still in the early stages and you feel confident managing all the receipts and recording transactions, you may not need a bookkeeper yet. Do your own bookkeeping and hire a part-time accountant as a financial consultant.

However, when your business starts growing you’ll soon be overwhelmed by the paperwork. Then, it’s the right time to get a full-time bookkeeper to record daily data and keep your finances organized. Plus, an accountant at this point can help you create a long-term business plan, handle taxes neatly or advise you on the legal structure. 

Before you finally decide between a bookkeeper vs accountant, consider not only their credentials and expertise but also their cost, reputation, and their experience working in your industry. 

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The Digital Accounting Era: Five Steps For Accountants To Succeed

Digital transformation is an inevitable trend that appears in almost every type of business today, and accounting is no exception. Accounting operations are changing significantly to adapt. This trend can be described as the Digital Accounting Era, where traditional operations gradually become obsolete and replaced by modern technology. So what do future accountants need to do to succeed in the Digital Accounting Era? This article will give you the answer to your question.

What is digital accounting? 

Digital accounting doesn’t have a standard definition, but it merely refers to creating, representing, and transferring financial information in an electronic format. Instead of using paper, all accounting transactions are manipulated and transmitted in an electronic environment. 

Digital accounting doesn’t eliminate the role of accountants or reduce the importance of accountants in the business. In fact, it values and empowers accounting professionals by making their work more proficient and effective. AI, cloud-based systems, and accounting task automation have left their marks on accounting practices. 

There are various reasons that more businesses are choosing digital accounting instead of traditional accounting today: 

  • Time and cost-saving: In medium and large-sized businesses, even a skilled accountant may need to spend up to 4 days operating invoices such as reading, putting data to Excel tables, verifying information, etc. These tasks may require hours and a lot of energy to complete. It also can cause error and fatigue during peak days. With the development of new technologies, such as RPA (Robotic Process Automation), most data is automatically handled by digital tools, leaving no room for error and fraud. It is much cheaper than labor cost and helps businesses wrap up these tasks in a shorter time. 
  • Accuracy and scalability: For a long time, manual processes have been a constant in various finance functions. Today, going paperless is the new standard as it is faster, cost-saving, and reduces errors. Digital accounting takes over manual accounting processes, from making statements, reports, invoices, budgeting with an undeniably accurate result. 
  • Easy access to financial information: A cloud-based system gives accountants, businesses, and other related departments the ability to access their data information at any time, from anywhere within an imperative. It means that you no longer need to be at the office or carry tons of paper to access crucial information. It is particularly helpful in managing and analyzing cash flow, making prompt and accurate decisions, and having better control over the input and output of the business. 

For example, Shoeboxed is an expense & receipt tracking platform that helps accountants get reimbursed fast and maximize tax deductions. By receiving customers’ receipts by mail or scanned documents, extracting the most important data to one organized place for easy and at-a-glance expense tracking, Shoeboxed allows customers to view and export their data anytime and organize them in their categorizations. This is by far the most effective way to organize and store businesses’ financial data for years to come. 

  • Data security: 

Data safety is a top priority of many businesses when cyber-attack continues to rise. Digital accounting software has extra security layers, such as authorized access, two-factor authentication, and regular backup. This brings businesses better protection to their financial data. 

  • Convenience and improved productivity: 

When an accountant is free from doing time-consuming, energy-wasting tasks, he can spend more time developing strategy, analyzing data collected by technologies, and focusing on tasks that require creativity and ingenuity.

As digital accounting has remarkably changed accountancy and brought various benefits for businesses performing accounting operations, it is more important than ever for future accountants to adopt digital accounting. Digital transformation requires accountants to have creativity in accounting tasks, stay ahead of the curve and constantly search for new solutions. Strong knowledge of modern technology helps you adapt and stand out in an era where technology takes over traditional accounting tasks. Chief Financial Officer (CFO), finance leaders, and accountants will need to be greater at planning strategically, organizing, foreseeing, and adequately channeling their financial processes.

However, it is simple to start your digital accounting journey with a clear plan. 

5 steps for accountants to succeed in the digital accounting era

1. Learn and practice technologies simultaneously

During the pandemic, we have seen that technology is one of the most rapidly growing sectors. Many businesses depend their lives on the development of technologies. Many business owners had to figure out a way to cope with the pandemic – going to digital transformation is one of the most effective ways. According to researchers, the accounting sector is greatly affected by the Fourth Industrial Revolution in general, and the digital transformation trend in particular. You will be in a great position if you have the necessary skills to support this rapid transformation and master new technologies. On the other hand, lack of digital skills will also become a weakness once opportunities in this sector become narrowed, and the demand for traditional accountants and auditors will decrease. Therefore, every future accountant needs to emphasize data management, system monitoring, and consulting skills to beat other competitors. 

2. Be able to analyze and present data effectively

It is important to know the way around technology, but it is even more important to make the most out of the financial data with the help of digital transformation. Changing the way you generate, analyze, and present data can be challenging because you need to think and work in a different way. However, if you keep your mind open and always stay innovative, you will soon get adapt. 

Especially in the time when digital transformation takes over most of the manual tasks, accountants will be free to discover and develop themselves more with the strategy and creativity in accounting – things that digital accounting can not provide yet. 

3. Cultivate strong critical thinking and communication skills

Future accountants need to ask the right questions and tell powerful stories to help people make accurate decisions. A combination of an inquisitive approach, powerful storytelling, the ability to leverage technology, and a deep understanding of business support, will help you achieve a firm position at any business. 

Just leveraging technology is not enough – you also need to integrate it with your existing knowledge and experience. While learning new solutions to your daily tasks, you should make a list of your expectations. Add what matches the task requirements or the software tools to your list and narrow down your final options. This way helps you not to be overwhelmed by the ocean of information. 

At the same time, you need to enhance the ability to observe, analyze and predict the data and information that digital transformation provides. This ability helps you to make accurate judgments for the business or conduct decisive strategies.

4. Be willing to discover and learn new technologies

Among all the necessary skills for a successful future accountant, agility is perhaps the most critical. Agility is about how flexible you are for a new organization, a process, or even a new change. Embracing agility means considering learning as a continuous process throughout our career. It would be best to remind yourself that the more you learn, the better you adapt to this evolving world. When you are agile, you are also more well-prepared for new opportunities. Signing up for digital courses, subscribing to technology newsletters, or simply taking notes on new knowledge when surfing Facebook… the way you learn is unlimited. 

5. Seek opportunities in tech-based companies

Tech-based companies know that technology is the future, a long-term investment. Working with digital technology helps many processes reach greater effectiveness and efficiency and drive you to the greatest results. When applying to tech-based companies, you will have a chance to observe and have hands-on experience in the smartest and most efficient way. You will also have access, be trained, and practice with the most modern software, helping to free employees from daily manual tasks and boring routines. The environment at tech-based companies is also extremely open and creative. This is an effective way to keep yourself innovating every day.

Final thoughts

Digital transformation has significantly changed the way that accounting works. With evolving customer expectations, technology development, stiff competition, and a higher demand for high-quality laborers, future accountants need to constantly learn, innovate and cultivate the most modern technology to stay on top of the game and succeed in the era of technological accounting.

Are you ready to enter the digital accounting journey? Subscribe to the Shoeboxed blog for more inspiring stories about entrepreneurship, staying organized and DIY accounting, and learning the latest digital accounting products. 

Accounting Solution Hack Now Financial Accounting in Business

Financial Accounting as an Accounting Solution? 

Financial accounting is an accounting solution that undertakes the work of recording, synthesizing data, and building financial statements to serve those who need to use accounting information. Information on the status and fluctuations of capital, assets, or physical and monetary flows will be synthesized by a financial accounting team based on data.

The finance and accounting team will include general accounting and data accounting, with a clear and transparent division of work to ensure work efficiency, specifically:

  • General accounting: Collect and process general information about the economic and financial situation of the unit. Through monetary units, general accounting provides data reflecting the use of assets and sources of asset formation of the enterprise.
  • Detailed accounting: Collect and process information according to a specific object on each unit. In detailed accounting, accountants must ensure accuracy to avoid affecting when resuming the data.

Financial Accounting for Businesses

A financial accountant is one of the positions that play an important role in the business, supporting businesses to perform tasks such as:

  • Provides information for those who need to use accounting information such as business leaders, external partners. Therefore, all financial accounting data provided should ensure accuracy, objectivity, and compliance with accounting principles and standards, which is the basis for managers to make appropriate and timely business decisions.
  • The information provided by a financial accountant is information about financial-accounting activities that have arisen, of a general nature, expressed in the form of value. Therefore, businesses can regularly monitor the status of their production and business activities.
  • Makes general financial statements about the business’ performance results of in the reporting period, including clear financial results and effective cost management that help businesses optimize costs and cut unnecessary expenses.
  • Manages risk and insurance for businesses when there are financial fluctuations.
  • Supports business leaders to regulate the financial situation of the business. The information from the financial accountant is also a legal basis to help businesses clearly resolve complaints, disputes, bank loans and investments.

Important Principles to Remember

Financial accounting should comply with the general corporate accounting rules. For instance:

  • Assets and liabilities are initially recognized at cost
  • Consistently apply the selected accounting regulations and methods in each annual accounting period. If there is a change in the method, the accountant should make a detailed explanation in the financial statements
  • To reflect in an objective, factual, complete, and correct manner in the accounting period in which economic, financial, and accounting operations arise.
  • For the preparation and submission of financial statements, accountants must do so accurately and submit them on time. The information and data in the financial statements of the enterprise should be disclosed according to the provisions of Articles 31 and 32 of the Law on Accounting.
  • Accountants evaluate assets and allocate expenditures and receipts in a uniform, careful and accurate manner with no deviation.
  • Preparation and presentation of financial statements must reflect the true nature of each transaction rather than its appearance

Financial accountants need to make monthly, quarterly, and annual reports such as: 

  • Monthly report: Provide VAT report, PIT report
  • Quarterly reports: Provide VAT reports, PIT reports, reports on the use of invoices
  • Annual report: Financial report, PIT finalization, CIT finalization, license tax
  • Accounting book:
    • General diary
    • General ledger
    • Receivable and payable report
    • Consolidate inventory report
    • Management of cash receipts and deposits
    • Management of raw materials, goods, finished products
    • Manage business revenue and expenses

In addition, a financial accountant also performs other tasks such as announcing the issuance of invoices, checking payment papers, etc. 

Management Accounting vs Financial Accounting

ContentManagement AccountingFinancial Accounting 
Purpose Provide information to serve the management of production and business activities.Provide information for the preparation of financial statements. 
Target customerCorporate managers (Board of Directors, Board of Directors). Business managers and external entities (Investors, banks, tax authorities, financial authorities, statistical agencies).
Providing information principlesThere is no obligation, managers are free to decide and adjust in accordance with the needs and management capabilities of the business.Respect the generally accepted and used accounting principles. In other words, financial accounting must ensure consistency according to certain accounting principles and standards so that everyone has the same understanding of accounting principles. Accounting information, especially financial statements, and financial accounting must comply with the provisions of applicable laws, especially the requirements of financial management and the requirements of society through disclosure. mandatory data.
Information’s scopesRelated to the management on each department (workshop, department) to each relevant individual.Involves financial management on an enterprise-wide scale.
Report timelineManagement accountants have more reporting periods: Quarter, year, month, week, day.Financial accounting has a reporting period: Quarterly, annually.
Information featuresEmphasize the relevance and flexibility of data, information is aggregated from many different angles.Reflect past information that is objective and verifiable. 
Statutory CompulsoryManagement accounting is not mandatory.Financial accounting is required by law. It means that the books and reports of financial accounting in all enterprises must be unified.

For small businesses and micro-enterprises to set up a complete and effective accounting system is quite difficult because of resource and cost constraints. Therefore, choosing an accounting service provider is currently the optimal solution for businesses today. Enterprises do not need to spend too much on paying staff salaries, office rental costs, or recruiting full accounting positions such as financial accountant, chief accountant, tax accountant, but still have a reporting system of reports and books in accordance with regulations.

At Shoeboxed, we provide the best receipt tracking and management system. As accountants and business owners using the Shoeboxed system, there is no need to worry about manage paper receipts as well as extracting transaction details from these invoices. Sign up now to use Shoeboxed for free or reach out to our representative for a demo and customized business plan.