Before I provide a distinction, you should be aware that if you don’t know the difference, you are not alone. Some people use the words interchangeably mostly because they don’t know that there is a difference. And although professionals within the industry know that there is a difference, many have a hard time articulating and explaining that difference to others. It is important that when you, the small business owner, decide to take the leap and hire a bookkeeper and/or accountant that you know the difference. What position/functions are you really to fill?
Generally speaking, a bookkeeper is a person without a college degree in accounting who performs much of the data entry tasks. This includes entering the bills from vendors, paying bills, processing payroll data, preparing sales invoices, mailing statements to customers, etc.
Given the “definition” of a bookkeeper, an accountant is likely to have a college degree with a major in accounting and typically takes over where the bookkeeper leaves off. The accountant will prepare adjusting journal entries to record prepaid expenses (expenses that have been paid for that are future services) and/or accrued expenses (expenses that have not yet been paid for but services have already been rendered). Other adjustments to accounts include the calculation and recording of depreciation/amortization, establishing allowances for uncollectible accounts, etc. After making the adjusting entries, the accountant prepares and reviews the company’s financial statements (income statement, balance sheet, statement of cash flows.) The accountant also assists the company’s management to understand the financial impact of its past and future decisions.
With the every changing accounting software, the distinction between accountant and bookkeeper and their roles keep evolving. But simplistically, what it boils down to is data entry (bookkeeper) or analysis (accountant)… or both. Remember that it is important that you (the small business owner) know the difference. What functions/positions are you really looking to fill? data entry (bookkeeper) or analysis/consultant (accountant)?
Good luck in your endeavors! ~Joyce