While you may notice the difference on the street – they look very similar, after all – there are important differences between a bookkeeper and an accountant. These can impact both the work done for your small business and the price you pay to get that work.
Bookkeepers manage the daily financial records of a business, literally keeping the books. Accountants can have more advisory positions, performing audits, managing reports, and offering advice to business owners.
While there are duties that overlap between bookkeepers and accountants, accountants usually hold degrees and certifications, while bookkeepers may have a two-year degree or none at all.
Keep in mind that there’s no hard line between the two terms. As long as they do misrepresent their qualifications, almost anyone can call themselves an accountant. This isn’t true of CPAs (Certified Public Accountants), which is a designation that requires specialized training.
All that is to say, check the background of the folks you hire before you take out a second mortgage to pay them.
Bookkeepers vs accountants
When you dive into a search for some financial help, how you frame the search may be more important than the answers you get from the search. If you’re running a business smoothly, have a clear path to the next step, and have someone on staff who understands finance, you might just need some help keeping the books balanced.
In that case, a bookkeeper is going to add the most value to your business. You need a person who can put their head down, do the math, and sort that bag of receipts into something meaningful. A good bookkeeper is going to save you time and money by getting their head quickly around the structure of your business.
An accountant’s time is – largely – wasted on inputting, checking, and balancing. If you’re interested in getting more out of the investments you make, making smarter buying decisions, or want to get a better handle on your cash flow, an accountant is going to be your best bet.
As a decent – but not strict – guideline, you’ll be looking for a bookkeeper when you know what you need done and just need someone to do it and an accountant when you’re not sure what to do.
The cost of hiring a bookkeeper or accountant
There’s no fixed cost for hiring accountants or bookkeepers. The Bureau of Labor Statistics says that accountants and auditors make about $30 per hour, so it wouldn’t be surprising to be charged twice that, on average. Bookkeepers, on the other hand, make about $18 per hour, so you might expect to be charged around $40 for their time.
That’s not a hard and fast line, by any means. Like any other service, the amount you pay is largely dependant on your location, what you need done, and how experienced the practitioner is. Getting taxes prepared for your LLC might fall on the low end, while building out a full reporting suite could run you hundreds of dollars per hour.
You should also be ready for a non-hourly rate when you ask for a quote.
Accountants as business consultants
With more and more technology entering the industry, accountants and bookkeepers have more capacity to focus on how your business works, rather than just on what the numbers are. For bookkeepers, this means less time is spent identifying which expenses go where and more time can be spent double checking entries.
For accountants, it means you’ll spend less time verifying the work that a bookkeeper or other employee has performed. Instead, accountants can now help solve the business problems you have.
This means you can hire an accountant as a consultant, addressing a problem with them as a member of your business instead of as a contractor.
As an example, imagine the two times in the year people hire accountants for tax purposes. In the old world, you would hire your accountant to come in at the end of the year, audit your business or check your books, and prepare your tax forms.
In the new world, that accountant is hired at the beginning of the year to help you plan for a lower tax bill in the coming tax year. They add value to your business not just through their book-balancing skills, but by understanding the business challenge you face.
The last word on accountants and bookkeepers
Once you figure out what your real business need is, you’ll know where you need to turn for help. With either a bookkeeper or an accountant, you’ll want to set up an accounting software package that matches your business needs.
The closer its features align to your workflow, the less time it’s going to take to integrate it into your business. For tips on making accounting work for you, check out Capterra’s finance blog.