U.S. businesses of every size have some volume of financial information that must be organized and reported to fulfill legal obligations, such as tax requirements. There are several professional occupations that revolve around recording, reporting, organizing, and analyzing this financial information, namely bookkeepers and accountants. But, to distinguish between bookkeeping and accounting, one must learn what it means to be a bookkeeper and how that work compares with a career as an accountant.
What Is Accounting?
Accounting is a scientific discipline that is dedicated to the management of financial information for individuals or businesses. Through their education, accounting professionals learn how to analyze financial statements in order to find opportunities for organizations to improve their financial standing. This could involve evaluating past spending habits in order to optimize a budget or advising an organization’s leaders to make more profitable investments. Accountants may also be hired in a forensic role to investigate instances of fraud within some organizations.
The most successful accountants are typically highly educated. In fact, there is a prerequisite of completing at least 150 hours of higher education before a professional can become a Certified Public Accountant (CPA). This amount of education is more than what is typically required for a bachelor’s degree. Therefore, earning a Master of Accountancy will likely make the most sense for accountants who hope to accelerate their career advancement.
What Is Bookkeeping?
It may be difficult to distinguish between bookkeeping and accounting because of the fact that bookkeeping actually accounts for a large portion of accounting processes. But the main difference between the two occupations is that bookkeepers usually focus only on the process of recording, storing, and retrieving data about an organization’s financial transactions. Accountants are qualified to provide their employers with these same services, but they also influence companies by offering more in-depth, actionable advice regarding their finances. Put simply, an accountant may perform some of the same tasks as a bookkeeper, but a bookkeeper would not be qualified to handle all of the work responsibilities of an accountant.
How to Become a Bookkeeper or Accountant
Bookkeepers require less extensive education than accounting professionals; in fact, many bookkeepers only need to be trained by their employers to be effective in their jobs. Earning a degree or certification, such as the Certified Bookkeeper (CB) designation, may help them gain expertise in the field, but earning these credentials is not necessary for career progression.
Conversely, finding a well-paying job in accounting will normally demand at least a bachelor’s degree. Many employers even prefer that their applicants already have a Master of Accountancy. This is because individuals with a master’s will have already met the 150-hour study requirement that is necessary to take most accounting certification exams. They are also more likely to have a thorough understanding of the advanced techniques that are used to maintain the finances of larger organizations.
Distinguish Between Bookkeeping and Accounting Careers
These are the typical work environments for jobs in bookkeeping and accounting:
Bookkeepers usually work in offices or at their clients’ places of business. They may need to work with a team of accountants, auditors, or management staff to achieve their goals. A bookkeeper’s job usually entails entering financial transactions into a database or bookkeeping software. After the data is entered, the bookkeeper may also need to generate reports that can be used by the organization’s administrators or accounting team. This work is a good fit for professionals who are very detail-oriented, work well with computers, and are competent with math. The Bureau of Labor Statistics determined that the median salary for bookkeepers was $38,390 in 2016, but the number of jobs in the field is not expected to grow over the next 10 years.
Accountants usually have the same work environment as bookkeepers, but their responsibilities are more extensive. The accountant will likely need to review the records that a bookkeeper has made while also creating his or her own records. Using these financial records, the accountant then verifies whether the company’s finances are compliant with applicable laws and regulations and determines if the company is facing any financial risks. Accountants also need to compute taxes, prepare them, and make sure that their employers pay their taxes correctly. If they are inclined to do so, accountants can also use their observations of a company’s financial records to suggest ways an employer can reduce costs and enhance revenues to maximize overall profitability. For professionals who are good with numbers and proficient at thinking analytically, this job can be quite rewarding. The Bureau of Labor Statistics determined that the median salary for accountants was $68,150 in 2016, and jobs in the field should grow by 10 percent through 2026.
Whether the work is being performed by a bookkeeper or an accountant, properly managing financial records is critically important for limiting the risk of money being poorly invested or stolen. Bookkeepers are generally less knowledgeable of asset management concepts, such as compliance/tax laws and investment strategies, so trained accountants are currently in high demand. Now is as good a time as any to earn a Master of Accountancy, because graduates may be better positioned to earn specialized certifications and bolster their professional competence.
Find out more about how Ohio University’s online Master of Accountancy program strives to prepare students for success as financial professionals in today’s competitive landscape.
Bureau of Labor Statistics, “Occupational Outlook Handbook: Bookkeeping and Auditing Clerks”
Bureau of Labor Statistics, “Occupational Outlook Handbook: Accountants and Auditors”
Investopedia, “Accountant: Career Path & Qualifications”