The Difference Between Accountants and Bookkeepers and Why it Matters for Your Business


If you were building a house, would you hire a roofer to help you draw up the blueprints? Or would you ask a painter how many support beams are needed for the new construction? I hope not! The roofer and painter are highly-skilled specialists, and their work is necessary to complete your project. However, they aren’t the right people to help you design the building.

As silly as this example may seem, common misconceptions about the terms “Accountant” and “Bookkeeper” have led to disastrous results for some businesses. It is important to understand the difference between these titles and the vital role they each play in responsible business management. 

Why the confusion?

I don’t know anyone who started their own business just so they could spend all their time on accounting—excluding myself, of course. Business owners recognize that certain specialized roles must be filled for regular operations to take place. Many start-ups are advised to seek help with accounting, but misunderstandings about accounting functions may lead them down the wrong path.

A common source of confusion comes from tax season. Every business has to meticulously prepare and submit annual tax forms. To ensure compliance and minimize tax burden, owners and operators rely on qualified tax accountants or tax preparers. Many business owners only focus on accounting when it’s time to submit their tax returns. So, when they say “accountant,” often what they really mean is “tax accountant.” 

In truth, there are many kinds of specialized accountants, including management accountants, cost accountants, forensic accountants and auditors. I haven’t even mentioned bookkeepers yet and you can already see why some people mix up these terms. So let’s get some basic definitions out of the way before we move on!

Defining the Roles

A tax accountant is qualified to provide long-term tax assistance and advisory services for businesses. Whereas, a tax preparer is limited to assisting with the preparation and filing of income tax returns. The difference comes down to experience, training, and certification.

A management accountant is responsible for preparing and presenting financial reports to the business owners in order to give an insight into business performance. They can also help by designing and implementing consistent, repeatable processes for financial reporting and records management.

Finally, a bookkeeper is someone who records all transactions and keeps businesses financially organized. They process payroll, reconcile bank statements, and handle other repetitive, transaction-heavy tasks.

While there are many other kinds of accountants and financial management professionals, these are the terms that are most often used interchangeably.

When a Bookkeeper isn’t Enough

A good bookkeeper is valuable and I’m the first to sing their praises. Bookkeepers on the Advantage Insights team do incredible work for our clients, maintaining constant communication and making sure financial reports are complete and up to date at all times.

However, there is a limit to the financial management challenges a bookkeeper can help you solve. If your financial reports need cleaned up, your reporting processes need to be built, or you need help with advanced budgets, a bookkeeper simply won’t have the training or experience necessary to help you.

A bookkeeper hired to perform the role of a management accountant—and I’ve seen it happen—is put into an unfair and unfamiliar situation. Most will try to do their best, but just like a roofer who has been asked to create blueprints for a new construction project, the bookkeeper is caught out of their depth, performing tasks they weren’t trained to do.

Many small businesses launch without an accountant, and understandably so. Owners attempting to make a business work on a modest budget may not see the need for an accountant right away. However, as any business ages and grows, accounting tasks always become more complex. This represents an opportunity wrapped in a challenge: how do we organize all this financial data moving forward, and how do we draw insights from that data to improve our performance?

Even with a relatively young business, a bookkeeper will not be able to perform the function of a management accountant. Bookkeepers thrive when a strategy is set and financial accounting processes are already in place. But when it comes to accounting clean-up, adaptive budgets, business processes, and strategic analysis, you want a management accountant. 

I’m an accountant who works with a team of exceptional bookkeepers.

I have to admit, I cringe when I hear ‘bookkeeper’ and ‘accountant’ used interchangeably. I’ve seen businesses that need an accountant instead recruit a bookkeeper. By doing so, they set themselves up for failure, not to mention their new employee.

The differences in training, certification, and experience really do matter. Accountants and bookkeepers both perform specialized roles and engage in ongoing training. In larger companies and accounting firms, they work together—with bookkeepers offering diligent and thorough transactional process management that enable the accountants to perform more advanced financial management functions.

Simply put, if you need the numbers, ask your bookkeeper. If you need to understand what the numbers mean, ask your accountant. Depending on your own financial management challenges, you may need to find out how to fulfill both roles in a cost-effective manner.

Advantage Insights works with each client to clearly define their financial management challenges and then design a suite of services that directly address them. The extent to which our clients need help with bookkeeping and accounting tasks is determined from the outset and a plan is put in place. 

So What do You Need?

No matter how you choose to address your financial management needs, find a qualified accountant who is curious about your unique business, challenges, and goals for the future. There is no one-size-fits-all approach to business accounting and your situation demands a custom approach.

Whether you need basic bookkeeping support, or more advanced accounting and advisory services, Advantage Insights can offer a plan that meets you where you are. Along the way, if our approach needs to change, we are flexible to scale up or pull back. 

Sign up for a free consultation to learn how your business could benefit from our services. Business accounting touches all aspects of your operation and can help you become more efficient and improve profitability. Contact Advantage Insights today.

sign up for your free consultation

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.