What is the difference between a bookkeeper and an accountant?

This is a common question. The reality is that the difference can be unclear, even those who work in the financial industry. The two are very closely connected, but each one plays their own role in your business

Bookkeepers

A bookkeeper uses accounting software and general accounting principles to record all of your business transactions. This includes purchases, sales, bills, receipts, invoices, payroll management, and even more complex items like fixed assets. The goal is to generate data about what your business does and how well it is doing it, providing reports that can you insight into the inner workings of the company. A bookkeeper does not generally have a deep understanding of tax law for your country or state, and is not required to have a special certification or degree

Accountants

An accountant may set the guidelines or standards a company uses when recording transactions, particularly in areas that relate to tax law. Then a bookkeeper carries them out. While a bookkeeper can give you straightforward information on your business, an accountant uses this same data to provide long-term financial guidance. They may forecast business trends, point out opportunities for growth, and offer analysis on the bookkeeping data. Accountants require a degree before they can present themselves as accountants, and additional requirements must be met before they can indicate they are a Certified Public Accountant (CPA). An accountant may be a bookkeeper, but a bookkeeper is not an accountant. A CPA can also represent your business if you get audited by the IRS

Which one should I hire?

Many businesses benefit by hiring a bookkeeper to keep their records in good shape. Less complex businesses may only need a bookkeeper to do the day-to-day financial work, and can handle tax preparation themselves. Hiring a bookkeeper is generally much less expensive than hiring an accountant. However, if you need additional help with tax preparation, or more in-depth analysis of your business finances, an accountant may be helpful. You can still use a bookkeeper to do the record keeping, and the bookkeeper can work with your accountant when needed. This is a typical business relationship, and still saves you money since your accountant would charge much more to do the same job your bookkeeper is already doing