While some people choose careers that involve working primarily with people—such as becoming a police officer, psychiatrist, or social worker—others prefer to spend their days working with numbers.
If you fall into the latter category, a career in bookkeeping or accounting may be right for you because both of these roles offer the opportunity to add, subtract, and average data to your heart’s content.
Sometimes these two titles are used interchangeably, but they are actually two very different positions. To help you better understand how it is they differ, it helps to first recognize what each one is on a foundational level.
Breaking Down Bookkeeping and Accounting Foundationally
A bookkeeper is someone who maintains financial records—or “keeps the books” as it’s often said—for professionals, businesses, and organizations. Put another way, a person in this role is tasked with keeping track of all of the monies coming in (which are often referred to as credits in the accounting world), as well as all of the monies going out (commonly called debits).
An accountant, on the other hand, is a financial professional who is hired to prepare a company’s financial documents, analyze these document’s data, and may be called upon to audit the account information. In some cases, accountants also make recommendations to help the business or businessperson attain and maintain higher levels of profitability.
To better understand how these roles offer different types of services, imagine that your car is damaged in an accident so you take it to two garages to get quotes. The first garage gives you an itemized list of everything that is wrong with the vehicle, as well as the corresponding costs to fix it.
The second garage offers to use the same type of information to help you file your insurance claim while also making recommendations about what damages are worth fixing and which you can bypass without hurting the value or functionality of the car.
Both use the same set of numbers, it’s just that the first one (the bookkeeper) compiled all of the data and presented it to you to use as you see fit while the second garage (the accountant) was able to do more with the information, even offering advice as to how to move forward in a way that helped you financially.
As you can see, bookkeepers and accountants are very similar. Therefore, before we dive deeper into the differences, let’s talk about what these two career paths have in common.
Both of these financial professionals work in an office setting. Sometimes these offices are located within the companies themselves; other times services are provided out of a private office or home.
The Bureau of Labor Statistics (BLS) further indicates that, while bookkeepers and accounting clerks typically work full-time business hours, there are times when these hours become extended, such as during tax time or if audits are being conducted.
The handling of confidential financial data
Both roles also require the sharing of important financial data. Therefore, regardless of which one you choose as a potential career path, a certain level of discretion will be necessary.
According to the American Institute of CPAs (or AICPA as it’s called for short, with CPA standing for Certified Public Accountants), there is no federally mandated accountant-client privilege which prevents this type of financial professional from divulging a company’s confidential information with third parties.
However, there is at least one federal statute—26. U.S.C. § 7525(a)—that does provide businesses and accounting clients with some level of confidentially, primarily with regard to data exchanged for tax preparation and filing purposes.
This enables the company to share relevant financial data “without fear that the information will be disclosed subsequently,” says the AICPA. Additionally, some states do recognize a form of accountant-client privilege, with Florida, Pennsylvania, Colorado, and Missouri being a few.
Understanding of financial statements and jargon
Working in both bookkeeping and accounting also require that you have some degree of familiarity with the financial statements commonly used by businesses. Taking this one step further, you must also know which information goes where on the forms so all of the company’s data is reflected accurately in its bottom line.
This requires being familiar with basic accounting jargon and terminology. For instance, when working with a company’s finances, it’s important to know that appreciation refers to the increase in an asset’s value while principal refers to the face amount of a security minus any premium or interest.
Requires organization and accuracy
To succeed in either of these roles, you also need a high level of organization and a keen attention to detail. If you aren’t organized, you’ll have a difficult time locating and keeping track of all the necessary information. And if you don’t pay enough attention to detail, the data you provide could be inaccurate, which can create several problems.
For example, Risk Management magazine reports that erroneous financial documents can reduce the value of a business, a situation that makes for unhappy stockholders if the company is publicly traded. In some cases, the U.S. Securities and Exchange Commission (SEC) becomes involved, putting the company’s officials on the hot seat since they are the ones who ultimately sign the statements. All because you didn’t double check your numbers.
For these reasons, both bookkeepers and accountants must be organized and detail oriented. If they aren’t, they are putting their employers, clients, and stockholders at risk.
How Bookkeepers and Accountants Are Different
With all of the similarities between these two career paths, you may now be wondering how each one is different. Here are a few areas to consider.
Job duties, responsibilities, and tools
As a bookkeeper, your primary duty is to collect all of the business’s financial data and make sure it is recorded accurately. This typically involves using what is called a general ledger, a term used to describe a system of placing all financial information in its appropriate category according to whether it is an asset, liability, revenue, expense, or owner equity.
The BLS adds that bookkeepers, also sometimes referred to as bookkeeping clerks, often have job duties related to preparing bank deposits, verifying receipts, processing payroll, making purchases, preparing invoices, and monitoring accounts that are overdue.
Accountants duties and tools are a bit different. For instance, instead of working so much with a general ledger, accountants work primarily with financial documents or statements.
The U.S. Securities and Exchange Commission (SEC) explains that there are four main financial statements used in business. They are:
- Balance sheet – shows the company’s assets versus its liabilities at a given point in time
- Income statement – lists money coming in and money going out for a specific time period
- Cash flow statement – shows cash-based exchanges during a specific period of time
- Statement of shareholders’ equity – reports shareholder interests for a specific time period
Accountants are also sometimes responsible for making recommendations based upon the company’s current financial health or status. That makes this more of an advisory role versus simply keeping the numbers organized and in balance.
Additionally, if you work as an accounting clerk within a large company, tasks are typically more specialized according to the BLS. For example, if you work within the accounts payable department, your duties will likely revolve solely around the accounts that are due and owing to the company, whereas if you work in accounts receivable, your focus will be on incoming monies instead.
Because accounting roles require actual analysis of the accounts versus simply inputting of numbers, individuals working in this type of position also benefit from having analytical skills.
The better you’re able to analyze the company’s financial data to gain a clearer idea of what it means, the easier it is to offer recommendations about how to move forward.
When discussing how much you can earn as a bookkeeper or accountant, it’s important to note that pay for both can vary tremendously based on a variety of factors. Some of these factors include your level of education and experience, whether you hold any relevant certifications, and where you live and work geographically.
With that in mind, pay can vary between bookkeepers and accountants. What does this mean?
Why such a difference? The answer to this question lies, in part, with each one’s level of education, training, and certification requirements.
Education, training, and certification requirements
Individuals working as accountants typically have at least a 4-year degree (a bachelor’s) in accounting or a similar field, though some businesses require their accountants to have a master’s.
And if you plan to file reports with the SEC, the law requires that you be a Certified Public Accountant, or CPA. Each state has its own Board of Accountancy, which is the agency responsible for providing this licensing for individuals wishing to offer accounting services within that particular jurisdiction.
Another option is to earn your 2-year degree (an associate’s) and work as an accounting clerk or bookkeeper. Both of these roles generally require some college-level accounting courses and can include on-the-job training, better preparing new employees to take on the financial tasks for which they are assigned.
When choosing a new career, it’s also important to have some sort of idea about how many positions will be opening within that field in the future.
With regard to accountants, the BLS indicates that these types of jobs are anticipated to grow six percent by the year 2028, which is fairly consistent with the national average of all other jobs combined. This means an additional 90,700 positions that will likely need to be filled in the years ahead.
Unfortunately, the future doesn’t look quite so bright for bookkeepers and accounting clerks according to the BLS, with jobs in this sector expected to decline by four percent in the same period of time. Yet, not everyone agrees with this prediction.
Accounting Principals offers real-time jobs reports which shares that, as of October 2019, 16,000 jobs have been added within financial activities this month alone. Additionally, jobs in this sector have experienced a 1.4 percent year-over-year growth, and a month-over-month growth of 0.2 percent. This is very promising, especially if the trend continues.
Which Career Path Is Right for You?
Now that you have a clearer understanding of the differences between a bookkeeper and an accountant, it will become easier to choose the career path that makes the most sense for you.
Ultimate Medical Academy offers a Healthcare Accounting Associate Degree designed to prepare students for entry-level positions in basic accounting, bookkeeping, and auditing clerk. This program provides students the foundational education and skillset necessary in this field, even if your goal is to pursue additional studies to become an accountant, should your credits transfer to another institution.
Interested in learning more about what it means to get a Healthcare Accounting Associate Degree? Visit our website today. Be sure to subscribe to our channel before you go!