An accountant is a professional who’s in charge of reviewing and analyzing the company’s financial standing through the data provided by the bookkeeper.
Accountants don’t necessarily engage themselves with the company’s day-to-day financial operations. Instead, they are responsible for the company’s higher-level financial transactions, such as preparing and filing taxes, auditing, and high-level financial management.
Another marked difference between a bookkeeper and an accountant is that bookkeepers do not need a certain degree, but accountants do need to graduate with a degree in accounting. Aspiring bookkeepers can learn from training and experience, while accountants need to have the right diploma to be accountants.
Bookkeeper vs. Tax Preparer
A tax preparer is a person who prepares and files an individual’s or a business’ taxes, while bookkeepers, as mentioned above, are those responsible for the organization of finances within an institution. These roles can be fulfilled by one or two people in most cases—depending on how big the business is.
When it comes to taxes, a tax preparer does much more than just fill out forms for the client. A bookkeeper will be able to help with all areas related to the client’s financial organization but would not normally do any preparation or filing for taxes. In other words, if someone needs help with their taxes, a tax preparer is the right professional.
It’s important to note that the IRS requires certification in order for someone to prepare taxes.
Why do businesses need a bookkeeper?
Why is there a demand for bookkeepers? The answer is simple: businesses need them.
Whether one is a startup or a huge and established company, bookkeepers play a crucial role in keeping the company’s financial health in check. Specifically, bookkeepers are essential because:
- They help develop a sound budget for the business. Bookkeepers keep tabs of the company’s financial ins and outs regularly, generate data, and update financial records. With this information, a company can create a sound and realistic budget that reflects the business’s financial standing.
- They organize business finances. When a business owner needs to pull out specific financial information to give to the IRS, the bank, or the investors, a bookkeeper should be able to do so with ease. Bookkeepers are essential in maintaining and ensuring the company’s financial organization by appropriately filing and categorizing financial information.
- They aid with decision-making. When it comes to deciding for the business, everything must be considered and accounted for. Bookkeepers provide information on the company’s current financial situation and use such information to back up a business owner’s decision.
How Much Money Can You Make Bookkeeping?
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