Starting a business comes with a million to-dos. But one of the most important decisions—one that impacts your taxes, legal protection, and even how people perceive your brand—is choosing your business entity type.
If you’re not sure what that even means, you’re not alone. Let’s walk through it together.
Table of Contents
Introduction
Whether you’re a new business owner or growing your operations, understanding the roles of bookkeeping and accounting is critical. You may have Googled “what is bookkeeping” or wondered whether to hire a bookkeeper or an accountant. These roles may sound interchangeable, but they serve different purposes. This article offers a clear, practical guide to help you distinguish between bookkeeping and accounting—and decide which professional is right for your business.
Are you currently managing your bookkeeping in-house?
What Is Bookkeeping?
Bookkeeping is the backbone of every business’s financial health. It refers to the systematic and consistent recording of daily transactions, ensuring that every dollar coming in or going out is tracked and categorized properly.
Bookkeeping Definition:
Bookkeeping can be defined as: The daily process of recording financial data like sales, expenses, and payroll in an organized system.
In simpler terms, bookkeeping meaning revolves around accurately maintaining financial records to track a company’s financial position over time.
What Does a Bookkeeper Do?
The bookkeeper plays a foundational bookkeeping role in your company’s financial process. Here are the core bookkeeping tasks performed by the bookkeeper:
The bookkeeper records every transaction and ensures compliance with relevant financial protocols. A skilled bookkeeper helps ensure that your accounting system runs smoothly and that reports are available when needed.
What Is Accounting?
Accounting builds on the data provided by bookkeeping. It includes interpreting, summarizing, and analyzing financial information. Accountants translate numbers into insights, helping you make strategic decisions, file taxes, and plan future budgets.
Key accounting functions include:
- Preparing financial statements
- Performing financial analysis
- Handling tax preparation and planning
- Advising on budgets and investments
- Ensuring regulatory compliance
Many accountants are licensed as Certified Public Accountant (CPA)—a designation requiring a bachelor’s degree and passing a rigorous national exam.
Bookkeeper vs Accountant: Key Differences
Here’s a breakdown to help you compare roles:
| Feature | Bookkeeper | Accountant |
| Primary Focus | Daily transaction tracking | Strategic financial planning and reporting |
| Typical Credentials | Certificate or diploma | Bachelor’s degree, CPA (optional) |
| Tools Used | Bookkeeping software (e.g., QuickBooks) | Tax tools, reporting software, forecasting platforms |
| Output | Journal entries, ledgers, reconciliations | Financial statements, tax filings |
| Employment Scope | Operational | Analytical, advisory |
Accountant vs Bookkeeper: When to Hire Which
Still not sure who to hire? Here’s how to decide:
- Choose a bookkeeper when you need help with daily transaction management, invoicing, and cash flow.
- Choose an accountant when you need help with tax filing, budgeting, or interpreting financial data.
Tip: Many businesses use both services in tandem to streamline operations.
The real difference in the accountant vs bookkeeper debate comes down to function. The bookkeeper ensures the books are clean and accurate; the accountant uses those books to deliver strategic value.
Bookkeeping Accounting and Accountancy: How They Work Together
While different in scope, bookkeeping, accounting, and accountancy are interconnected.
- Bookkeeping involves recording day-to-day transactions.
- Accounting processes that data into meaningful information.
- Accountancy refers to the broader field that includes both.
This synergy ensures your business can scale with confidence, knowing both operational and compliance needs are met.
Why the Distinction Matters for Business Owners
As a small business owner, you don’t just need someone to manage receipts. You need professionals who can give you financial clarity and strategic direction. Clear bookkeeping makes tax planning and financial reporting far easier.
Hiring the right professional avoids costly mistakes, whether you’re applying for a loan, planning to expand, or filing taxes.
Example: Many business owners get audited simply because of poor bookkeeping—not necessarily fraud. Good records prevent that.
Bookkeeping and Accounting Services for Small Businesses
Outsourced bookkeeping and accounting services can streamline:
Look for bundled bookkeeping accounting services with access to a CPA. This ensures both compliance and advisory support.
Common Bookkeeping Tasks Explained
Here’s a breakdown of core bookkeeping bookkeeping tasks:
- Bookkeeping Records: Maintain receipts, invoices, and bank statements
- Journal Entries: Log each transaction with details
- Reconciliation: Match financial records with bank statements
- Tracking Debts & Credits: Manage accounts receivable/payable
- Preparing Cash Flow Statements: Crucial for forecasting
If you’re still wondering “what does a bookkeeper do?” — these functions answer that clearly.
Tools Bookkeepers and Accountants Use
Software platforms have made it easier to manage your books:
- QuickBooks: Great for SMBs
- Xero: Preferred by startups
- FreshBooks: Best for freelancers
- Wave: Budget-friendly option
Whether it’s a bookkeeper managing entries or a CPA analyzing reports, these tools improve accuracy.
Bookkeeping Qualifications vs Accounting Credentials
Bookkeeper:
- Certificate or diploma
- Member of Institute of Professional Bookkeepers (optional)
Accountant:
- Bachelor’s degree in finance or accounting
- CPA license required for Certified Public Accountant status
The book keeper accounting route is a good fit if you’re detail-oriented. The CPA path is ideal for strategic thinkers.
Refer to the Bureau of Labor Statistics for wage and career outlook data.
Frequently Asked Questions
What is bookkeeping in simple terms?
It’s the day-to-day recording of income and expenses.
What does a bookkeeper do that an accountant doesn’t?
Bookkeepers handle the books; accountants interpret those records.
Can one person do both bookkeeping and accounting?
Yes, especially for small businesses. But growth often requires specialization.
Is a bookkeeper an accountant?
No. A bookkeeper typically doesn’t have a CPA license.
Do I need a bookkeeper or an accountant?
You need a bookkeeper for daily records. You need an accountant for big-picture planning.
Conclusion
Choosing between bookkeeping and accounting services shouldn’t be a guessing game. Whether you’re hiring someone to maintain daily journal entries or need the strategic insights of a CPA, knowing the difference between a bookkeeper and accountant will empower smarter business decisions.
For many business owners, success lies in hiring both. Because clean books build strong businesses.
At Orbit Accountants, we specialize in delivering tailored accounting bookkeeping service for small businesses that goes beyond number-crunching. Whether you’re a startup navigating your first fiscal year or an established small business streamlining operations, our team ensures your books are accurate, compliant, and easy to understand. We combine cloud-based tools with experienced professionals to help you stay financially organized, save time, and make informed decisions—without the overhead of an in-house team.
Disclaimer: This article is intended for informational purposes only and should not be considered financial or legal advice.
