What’s the difference between bookkeeping and accounting? These two professions seem to go hand in hand. Some even use the words interchangeably in conversation. But the truth is that they’re not as similar as some may think.
In this guide, we’ll dive into the finer points of the two professions. We’ll define each, explore the differences between bookkeeping and accounting, and discuss what it takes to pursue roles in the fields.
What is bookkeeping?
Bookkeeping is the foundation of any healthy financial system, whether for a small business or a large corporation. It’s the meticulous recording of all financial transactions a company makes. Imagine bookkeeping as a daily diary of your business’s financial activity.
Bookkeeping involves categorizing each transaction, specifying the amount involved, and tracking it in the relevant account. Think of different accounts as different buckets for your money. For example, there might be a bucket for income received (sales), another for money spent on supplies (expenses), and accounts for things like cash on hand, money owed to you by customers (accounts receivable), and money you owe to vendors (accounts payable).
Bookkeepers ensure these buckets are properly categorized and meticulously record every deposit and withdrawal. This ongoing process provides a clear picture of a company’s financial health at any given time. It gives you concrete data on whether you’re making a profit, where you can save money, and whether you have enough cash flow to keep the business running smoothly.
What is accounting?
Accounting builds upon the foundation bookkeeping sets. Imagine the bookkeeper as the data collector, meticulously recording every financial transaction. The accountant takes that raw data and transforms it into a meaningful story.
Accountants analyze the information recorded by the bookkeeper. They use this data to prepare financial statements, such as income statements, balance sheets, and cash flow statements. These statements provide a comprehensive picture of a company’s financial health, profitability, and overall performance over a specific period. Accountants don’t just present the data; they interpret it, identifying trends, potential problems, and growth opportunities.
Various stakeholders use financial statements to make informed decisions. For instance, investors might use them to assess the risk of investing in a company. Management teams rely on them to make strategic decisions about resource allocation and budgeting. Regulatory bodies may use them to ensure companies comply with financial reporting standards.
In short, accountants take raw bookkeeping data and turn it into actionable insights that drive informed decision-making.
Differences between bookkeeping and accounting
While accounting and bookkeeping have many similarities, there are a number of key differences.
Education
Bookkeeping
Becoming a bookkeeper typically requires an associate degree in accounting or a specific bookkeeping certificate. Some bookkeepers may have a bachelor’s degree in accounting, but it’s not always necessary.
Accounting
Accountants usually need at least a bachelor’s degree in accounting or a related field, such as finance. Some accounting positions may require a master’s degree (e.g., Master of Accounting or Master of Business Administration).
Credentials
Bookkeeping
Certification is not always mandatory but can enhance your resume and demonstrate expertise. Common certifications include Certified Bookkeeper (CB) or QuickBooks ProAdvisor. Additionally, Intuit Academy offers courses that teach the basics of bookkeeping, and successful test-takers may use their badge and certificates for education and career advancement.
Accounting
Certification is highly encouraged and can significantly impact career advancement and earning potential. The most sought-after credential is the Certified Public Accountant (CPA) license, which is necessary for any accountant who files a report with the Securities and Exchange Commission (SEC). Other common options include the Certified Management Accountant (CMA) or Chartered Global Management Accountant (CGMA) designations.
Skills and duties
Bookkeeping
Data entry and accuracy: Bookkeepers are masters of accuracy, making sure all financial transactions are recorded correctly and consistently. This involves strong data entry skills and a keen eye for detail.
Software proficiency: Proficiency in bookkeeping software like QuickBooks is essential.
Account management: They manage accounts payable and receivable, process invoices, reconcile accounts, and ensure timely payments and collections.
Payroll processing: Bookkeepers may handle payroll functions, calculating salaries, deductions, and taxes.
Basic financial reporting: They generate basic financial reports, such as income statements and balance sheets, summarizing financial activity for a specific period.
Communication: Bookkeepers may communicate with vendors, clients, and internal teams regarding financial matters.
Accounting
Financial analysis: Accountants analyze financial data to assess a company’s financial health, profitability, and performance. They identify trends, potential risks, and growth opportunities.
Financial statement preparation: Accountants prepare financial statements like income statements, balance sheets, and cash flow statements. Part of that is making sure they adhere to the Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS) — comprehensive sets of accounting rules and standards used to prepare, present, and report financial statements.
Tax preparation and compliance: Some accountants specialize in tax preparation and ensuring companies and individuals comply with federal, state, and local tax regulations.
Internal controls and auditing: They may implement internal controls to safeguard company assets and ensure the accuracy of financial records. Some accountants specialize in auditing and evaluating a company’s financial statements for accuracy and adherence to accounting standards.
Financial modeling and forecasting: Accountants may use financial modeling techniques to forecast future financial performance and assess the impact of business decisions.
Communication and reporting: Accountants communicate complex financial information to various stakeholders, including management, investors, and regulatory bodies.
Salaries and job opportunities
Bookkeeping
Salary range: The average salary for bookkeepers varies depending on experience, location, and industry. According to the Bureau of Labor Statistics’ most recent pay data, bookkeepers make between $32,460 and $68,860 annually. The median pay is $47,440.
Job opportunities: Bookkeeping positions are abundant across various industries, with high demand among small and medium-sized businesses, nonprofit organizations, and health care providers. Many bookkeeping roles offer flexible work arrangements, including remote work options.
Accounting
Salary range: Accounting careers offer the potential for significantly higher salaries than bookkeeping. According to the BLS, accountants earn between $50,440 and $137,280, with the median pay coming in at $79,880.
Job opportunities: Accounting professionals are in demand across diverse industries, including public accounting firms, corporations of all sizes, government agencies, and nonprofit organizations. Accountants can specialize in various areas, such as tax, auditing, forensic accounting, or financial management.
Looking for an accounting or bookkeeping job?
Whether you’re interested in a career as an accountant, becoming a bookkeeper, or just want to understand your business finances better, knowing where bookkeeping ends and accounting begins can give you a real edge.
At Intuit, we’re always looking for talented people. If you’re in search of a bookkeeping job, apply online or join our Talent Community and stay up to date on future job opportunities. You can also explore our current openings, below.
Tax Associate (Remote/Seasonal)
- Minimum 2 seasons of paid Tax Preparation experience, with a minimum of 30 tax returns per tax year required
- Must be willing and available to work a minimum of 20 hours per week
- Excellent customer service skills are a must, and there is an expectation to interact with customers through video and audio tools in a professional, friendly, and confident manner
- Passionate about helping clients navigate the complexities of taxation
- PTIN required
Credentialed Tax Expert (Remote/Seasonal)
- Minimum 2 seasons of paid Tax Preparation experience, with a minimum of 30 tax returns per tax year required
- Must possess an active, unrestricted credential: EA, CPA, or Practicing Attorney with strong tax preparation experience and extensive knowledge of tax laws
- Must be willing and available to work a minimum of 20 hours per week
- Excellent customer service skills required for professional and friendly interaction with customers through video and audio tools
- Active PTIN required
Business Tax Associate (Remote/Seasonal)
- Minimum 3 or more years of experience preparing federal and state business tax returns (1065 and/or 1120-S) for at least 20 clients/customers per season for compensation
- Must possess or be able to obtain any related State licenses, certificates, permits or bonds
- Commit to a minimum schedule of at least 20 hours/week (minimum 4 hour shift increments) throughout the tax season
- Strong customer service skills for interacting with customers through video and audio tools
- Active PTIN required
Business Tax Expert (Remote/Seasonal)
- Minimum 3 or more years of experience preparing federal and state business tax returns (1065 and/or 1120-S) for at least 20 clients/customers per season for compensation
- Must possess an active, unrestricted credential: EA, CPA, or Practicing Attorney with strong business tax preparation experience and extensive knowledge of tax laws
- Commit to a minimum schedule of at least 20 hours/week (minimum 4 hour shift increments) throughout the tax season
- Strong customer service skills for professional interaction with customers through video and audio tools
- Active PTIN required
QuickBooks Live Bookkeeping Expert (Remote/Year Round)
- 3+ years of bookkeeping and/or accounting experience
- 3+ years of QuickBooks Online experience
- Required Credentials/Certifications: QuickBooks Online Certification (QuickBooks Online ProAdvisor)
- Experience supporting Payroll, Sales Tax, or Tax Preparation is a plus
- Strong customer service skills for professional, friendly interaction through video and audio tools
QuickBooks Live Sr. Associate (Remote/Year Round)
- 1-3 years of bookkeeping and/or accounting experience
- Minimum 1 year of QuickBooks Online experience
- Required Credentials/Certifications: QuickBooks Online Certification (QuickBooks Online ProAdvisor)
- Strong customer service skills are essential for interacting through video and audio tools in a reassuring manner