A bookkeeper and an accountant are sometimes included in a startup accounting team. While both jobs are essential, they serve distinct functions in promoting a company’s financial health.
An accountant is responsible for preparing financial statements, submitting tax returns, and providing consulting services. A bookkeeper must maintain accounts payable/receivable and create invoices.
What is the Difference Between an Accountant and a Bookkeeper?
There is often a bookkeeper and an accountant regarding startup accounting teams. Both roles are essential but carry out different functions to ensure a startup’s financial stability. So, what is the difference between an accountant and a bookkeeper?
Accountant
An accountant is responsible for preparing financial statements, filing taxes, and providing consulting services.
Preparing Financial Statements
One of the primary duties of an accountant is to prepare financial statements. Financial statements show a company’s overall financial health. This information is essential not only for startup owners but also for potential investors.
There are a few different things that an accountant must take into account when preparing financial statements. This includes:
- Revenue: This is the money that a company brings in.
- Expenses: This is the money that a company spends.
- Assets: These are the property or possessions that a company owns.
- Liabilities: This is the money that a company owes to others.
- Equity: This is the difference between a company’s assets and liabilities. It shows how much ownership each shareholder has in the company.
Filing Taxes
Another key responsibility of an accountant is filing taxes. This includes ensuring that the company complies with all tax laws and regulations. This can be a complex process, particularly for startups, so having a professional accountant is crucial.
Providing Consulting Services
Many accountants also provide consulting services in preparing financial statements and filing taxes. This might include advice on how to save money on taxes or recommendations on financial software. Consulting services can be extremely helpful for startup owners trying to navigate the often complex world of business finances.
Bookkeeper
On the other hand, a bookkeeper is responsible for recording financial transactions, maintaining accounts payable/receivable, and preparing invoices.
Recording Financial Transactions
One of the bookkeeper’s essential duties is recording financial transactions. This includes recording all income and expenses in the company’s accounting system. This information must be accurate and up-to-date so the company can clearly understand its financial health.
Maintaining Accounts Payable/Receivable
Another essential task for the bookkeeper is maintaining accounts payable/receivable. This involves keeping track of invoices and ensuring they are paid on time. This can be a complex task, particularly for startups, so having a professional bookkeeper is crucial.
There are a few different factors to consider when maintaining accounts payable/receivable. This includes:
- The Age of the Invoices: This is the amount of time that has passed since the invoice was issued.
- The Payment Terms: This is the amount of time the customer has to pay the invoice.
- The Discount Terms: This is the time the customer takes to take advantage of any early payment discounts.
Preparing Invoices
In addition to recording financial transactions and maintaining accounts payable/receivable, the bookkeeper is also responsible for preparing invoices. This includes ensuring that all information is accurate and that the invoices are sent out on time.
As you can see, both roles are essential in ensuring the smooth running of a startup’s finances.
While an accountant may have a more strategic role in terms of financial planning, a bookkeeper’s role is more operational. Both roles are essential in ensuring the financial health of a startup.
If you’re considering starting a startup, make sure you have an excellent team to manage your finances. A strong accountant and bookkeeper will help you keep up with your finances and avoid financial problems.