Bookkeeping vs. Accounting: What's the Difference? (2024)

Key Differences

With bookkeepers, there are a lot of minutiae involved, and keen attention to detail is paramount. Accountants, on the other hand, tend to use the bookkeeper's inputs to create financial statements and periodically review and analyze the financial information recorded by bookkeepers.

They conduct audits and forecast future business needs. We've listed some of the key differences when it comes to the requirements and job market for each.

Required Education

Both accountants and bookkeepers have a college education, although not all jobs require one. As previously mentioned, a bookkeeper can be hired out of high school, but that isn't always the case for every employer. Bookkeepers may hold an associate degree, as well.

Bookkeepers may start working for a small business to gain experience and then go back to school for a degree in accounting or finance. Enrolling in one of the best online bookkeeping classes is a smart way for those interested in this career to bolster their existing financial knowledge.

If you are interested in becoming an accountant, it may be beneficial to your career to become a certified public accountant (CPA), which has its own exam. Earning this designation is a common goal of many accountants.

You must have a minimum of 150 postsecondary education hours, or what amounts to a bachelor's degree in accounting, and an additional 30 hours of graduate work. Most CPA candidates go ahead and finish their master's degrees.

There are various career paths for accountants (and some for bookkeepers), from working as a forensic accountant to becoming a financial auditor or an enrolled agent.

Job Outlook

There are critical differences in job growth and salaries between the two. Growth for accountants and auditors is expected to continue for the next several years. The Bureau of Labor Statistics (BLS) expects 4% job growth in this field from 2022 to 2032.

However, bookkeeping and accounting clerk jobs are expected to decline, with the BLS projecting a 6% fall in jobs over the same period. The BLS notes that job growth for accountants should track fairly closely with the broader economy. However, bookkeepers will face pressure from automation and technology that will reduce the demand for such workers.

Salaries and Benefits

Both careers cover a broad gamut of salaries. This is particularly true for accountants. While accounting can be a lucrative long-term career, most accountants, unlike corporate attorneys or investment bankers, do not command huge salaries during the first few years.

Public accounting generally pays the most to a candidate right out of school. In particular, the big four firms of Ernst & Young, Deloitte, KPMG, and PricewaterhouseCoopers offer larger salaries than mid-size and small firms.

Depending on the city, job, and company, you can expect to earn between $64,000 and $115,000 as an accountant in 2024, with the lower salaries typical for accountants just starting out in their careers. Additionally, when working for larger firms, the benefits can be a large draw, including retirement plans, significant paid vacation days, telecommuting opportunities, and a robust health insurance package.

Bookkeepers make between $50,000 to $81,000 annually; significantly less than accountants. The types of benefits will also depend on the specific job.

Skills Needed

Both accountants and bookkeepers work with numbers and financial data. As a bookkeeper, your attention to detail must be almost preternatural. Careless mistakes that seem inconsequential at the time can lead to bigger, costlier, more time-consuming problems down the road. You must be able to multitask.

Rarely does a bookkeeper work on one big project for an eight-hour shift; instead, a typical workday involves juggling five or six smaller jobs. Nearly all bookkeeping is done using computerized accounting software and programs, so bookkeepers should be comfortable learning new technology if not proficient in it.

As an accountant, you must pay attention to figures and financial details, but it is more essential to possess sharp logic skills and big-picture problem-solving abilities. While bookkeepers make sure the small pieces fit correctly into place, accountants use those small pieces to draw much more significant and broader conclusions about a company's finances.

Which One Do You Need?

Whether your business is large or small, you must have an understanding of your accounting needs. As a business leader, you should have a good idea of which professionals best suit the needs of your company.

As such, it's important to know whether you need a bookkeeper or an accountant to keep track of your affairs. That may be tough since the roles and responsibilities may intertwine. So here are a few tips to help you decide.

You may want to consider a bookkeeper:

• For recording daily transactions
• If you have small inventories and a less complex business structure
• To satisfy a conservative salary budget (bookkeepers make less than accountants)

Choose an accountant:

• To help monitor and record complex transactions
• If you have larger inventories
• If you're able to pay more
  

Career Paths

For a long-term career, accounting offers much more upward mobility and income potential. The education required to be competitive in the field is greater, but the payoff down the road can be considerably higher.

Bookkeeping is a great starting point if you are interested in the field but not fully committed and want to test the waters. You may also be an ideal bookkeeping candidate if you want a good job with a respectable wage and decent security but may not be looking for a long-term career.

Enrolled Agent

An enrolled agent (EA) is atax professional authorized by the United States government. Their job is to advocate and assist taxpayers when they have issues with the Internal Revenue Service. To become one, you have to either have worked at the IRS or pass an EA examination.

Bookkeepers who are interested in switching jobs but do not have a college degree might consider becoming an EA after a stint with the IRS. This job doesn't require a college degree, only five years of tax experience with the IRS. All EAs must have 72 hours of continuing education every 36 months. If you are already a CPA, you can act as an enrolled agent without passing the exam. Only a federal license is required.

Financial Auditor

As a financial auditor, you may work as an external or internal auditor. If you are an external auditor, you will most likely have a job at a public accounting firm, and you will need to have a CPA license, plus a college degree, and often a master's degree.

An internal auditor—one who will work as part of a small company, keeping its books and financial operations—won't usually need a CPA license, and with experience and a solid skillset, may only need a bachelor's degree in finance, accounting, or business.

Forensic Accountant

Forensic accounting is a highly specialized field of accounting. A forensic accountant's job is to investigate, audit, and prove the accuracy of financial documents and dealings. These accounting detectives' work often centers around legal issues.

There are opportunities for forensic accountants in many industries, like nonprofit work, government and law-enforcement agencies, law firms, and large corporations.

To become a forensic accountant, you must usually have a CPA certification, plus earn a certified fraud examiner exam, which covers the legal side of fraud, criminology, ethics, investigation techniques, and how to go through financial transactions.

In addition, you must be a member of the Association of Certified Fraud Examiners. In most cases, employers want to hire someone with a bachelor's degree, and a master's degree may help boost your earnings.

The Bottom Line

People often confuse bookkeepers and accountants—and with good reason. While there are certain similarities and overlaps between the two, there are distinctions that set these two roles apart. Bookkeepers don't necessarily need higher education in order to work in their field while accountants can be more specialized in their training. Another key difference is their pay scale.

Because bookkeepers tend to work for smaller companies, they may not be paid as much as accountants. Knowing the differences between the two can help people find their niche in the industry and can give guidance to companies on who to hire for their needs.