Bookkeeper vs Accountant - What’s the difference?
Written by Aqleema Anwar
Thinking she was making a budget-savvy decision, Jen hired a bookkeeper to file her taxes. The bookkeeper filed the taxes incorrectly and Jen ended up owing the government over $16,000 dollars. When she tried to contact her bookkeeper for an explanation, she was suddenly no longer reachable. This story highlights a lot of questionable decisions made by Jen and truthfully, they’re decisions that anyone who doesn’t have the proper knowledge about business finances could easily make themselves.
Before going back to Jen, let’s go over some business finance basics starting with the term bookkeeping.
Bookkeeping refers to the process of recording your business’ financial transactions which in turn creates the financial statements for your business - it’s essentially the process of “creating the books” and it absolutely should be a required part of your business finance process. Bookkeeping can be done by yourself or you can hire a bookkeeper. But understand that a bookkeeper IS NOT the same as an accountant. Here are some key differences between the two:
Bookkeeper:
Usually not a certified accountant so will have limited knowledge of tax laws.
Creates your financial statements by pulling together all of your business transactions (revenue, expenses, etc.)
May not have a vested interest in your business - ask business advice with caution
Accountant:
Make sure you’re working with a CPA
Being certified means they have a detailed knowledge of accounting rules and tax laws
Vested interest in ensuring your business is accounted for correctly - as this is their professional duty so you can ask them questions with confidence
So, you can choose to do the bookkeeping yourself or hire someone but you absolutely cannot run your business without an accountant . A bookkeeper is an optional part of your financial consulting team but an accountant must be a mandatory part of it.
If we go back to Jen and her decision to have her bookkeeper file her taxes we can understand why she ended up having to pay so much in taxes. Her bookkeeper clearly had little to no knowledge of tax laws and accounting rules. It was Jen’s responsibility to make sure someone certified was responsible for her taxes and she also should have interviewed her bookkeeper and developed a relationship with her to potentially not be ghosted once the issues arose.
As a CEO, you must be the one who is on top of your business finances. How will you make good business decisions if you only look at your finances when it’s tax time?
Aqleema Anwar is a content writer and online business manager based in Toronto. She is dedicated to sharing compelling human interest stories and is passionate about supporting female entrepreneurs in their business endeavors and content creation. In her spare time, she enjoys cooking and listening to true crime podcasts. Follow her on Instagram @ask.aqleema
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