FINANCIAL LITERACY • 11 JANUARY 2024 • 4 MIN READ

Accountant vs. Bookkeeper: What’s the Difference

Man doing some accounting work with a calculator

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Accounting vs. Bookkeeping

Common FAQs

The terms ‘accountant’ and ‘bookkeeper’ are often used interchangeably, but there are important differences. Both play critical roles in managing a business’s financial records, but the responsibilities of each serve different and complementary purposes.

In this blog, we’ll answer the key questions about Accounting vs Bookkeeping, including:

What does an accountant do?
What does a bookkeeper do?
Common FAQs on this topic

Accounting vs. Bookkeeping

What does an accountant do?

While anyone can call themselves an accountant, most people are looking for a qualified or chartered accountant when looking to engage or work with one. A qualified or chartered accountant has spent many years training, studying, sitting exams and carrying out continuing professional development to become an expert in the accounting field.

Accountants are typically responsible for financial reporting, financial analysis, tax planning and compliance.

Financial reporting - preparing financial information which includes profit and loss statements, balance sheets, cash flow statements and more.
Financial analysis - reviewing financial information and identifying trends, anomalies, inefficiencies or opportunities. Accountants can help convey what financial data means and therefore assist with decision-making.
Tax planning - Tax legislation is lengthy, complex and constantly evolving. Accountants stay on top of the ever-changing tax landscape in order to minimise tax liabilities for their clients while remaining compliant. By knowing the tax rules, reliefs and credits, accountants are always looking for ways to improve tax efficiency for their clients, and help them preserve cash for investing back into their business.
Compliance - compliance with the IRD is a key role of an accountant. All businesses have statutory responsibilities in terms of filing financial statements and tax returns with the IRD. Accountants are responsible for correctly preparing these documents and ensuring they are filed in the right place at the right time.

Aside from these core areas, accountants can also provide a broad range of services related to audit, assurance and tax advisory with many accountants specialising in particular areas.

What does a bookkeeper do?

Bookkeepers focus on the day-to-day record-keeping of a business. They are responsible for maintaining good financial records which are then used by accountants for preparing financial statements, management accounts or tax returns.

Some bookkeepers will have formal education and qualifications, but it is not a necessary requirement for the role.

A bookkeeper's key responsibilities include data entry, reconciliation of accounts and managing accounts payable and receivable.

Data entry - the key daily task of most bookkeepers. Most bookkeepers will now maintain a business’s financial records in software such as Xero, MYOB, or Quickbooks. The software will reflect all transactions the business has been involved in and will ‘code’ these transactions to a particular income, expense or balance sheet code. Bookkeepers are responsible for ensuring these transactions are recorded accurately and completely.
Reconciliation of accounts - Reconciling bank accounts and credit card statements is a method of checking that the record-keeping has been carried out correctly and ties back to the ‘real world’ i.e. ensuring that what the accounting software thinks the bank balance is matches what the bank says the bank balance is. This process helps ensure the accuracy and integrity of the business’s records.
Accounts payable and receivable - this refers to the entities that the business owes money to (accounts payable) and from (accounts receivable). Some bookkeepers may be responsible for chasing late payers and managing payments to suppliers but this depends on the agreement between the business owner and bookkeeper. A bookkeeper may also prep payroll/wages, but not all bookkeepers will carry out these tasks.

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Common FAQs

1. Do I need both an accountant and a bookkeeper for my small business?

This depends on your business needs.

The majority of businesses need an accountant as they will likely need support in filing financial statements and tax returns with the IRD. Meanwhile, some businesses may not require a bookkeeper if the business owner feels confident in carrying out the day-to-day record-keeping themselves, especially if the number of transactions is low.

For larger or growing businesses, having both an accountant and a bookkeeper is incredibly beneficial. An accountant will ensure you are staying compliant, minimise tax liabilities and advise on the performance of the business, while a bookkeeper will look after the day-to-day record keeping. Having both frees up the business owner to focus on running the business.

2. Can a bookkeeper perform the same tasks as an accountant?

We don’t recommend that you use a bookkeeper to carry out the tasks of an accountant unless they are also a qualified or chartered accountant.

An accountant has a much greater understanding of more complex financial matters. Qualified or chartered accountants have undergone extensive education and training in order to perform the more complex tasks and responsibilities required in the profession.

3. How do I choose between an accountant and a bookkeeper?

Consider what you need support with. If you’re struggling with day-to-day record keeping then a bookkeeper is what you need. In almost every case, but especially if you need support with financial statements or tax returns, tax planning or financial analysis then an accountant is what you need.

4. Are accountants more expensive than bookkeepers?

Typically accountants do charge a higher rate than bookkeepers, due to their qualifications and their ability to support clients with technical expertise. However, accountants and bookkeepers both play an integral role in running a successful business, with each bringing a specific skill set. They complement each other, with bookkeepers handling the day-to-day financial operations and accountants supporting higher-level strategic decision-making.

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