Bookkeepers who excel at their jobs are also sometimes promoted to accounting positions, even if they lack the level of education the company typically prefers. A bookkeeper can expect to earn a salary in the range of $30,000-$60,000 a year in the US. However, compensation will widely vary depending on the employer, location, and candidate experience. Bigger companies tend to offer better compensation for bookkeepers; this is largely due to the increased volume of transactions and data. A multinational corporation performs hundreds of transactions a second, while a small business might perform less than a hundred in a day.

An accounting cycle is an eight-step system accountants use to track transactions during a particular period. Equally, if you’re looking for more technical advice, or need help completing your annual accounts, then an accountant can step in and assist. Also, because bookkeeping is an administrative task, there is no formal training or licensing required for a professional to call themselves a bookkeeper. In fact, many small business owners perform their own bookkeeping tasks using software like GoDaddy Online Bookkeeping.

Take your learning and productivity to the next level with our Premium Templates. The line between where a bookkeeper role ends and an accountant’s begins is not set in stone. However, the two either work closely together or one person can end up handling both. However, if your accountant does your bookkeeping, you may be paying more than you should for this service as you would generally pay more per hour for an accountant than a bookkeeper. Usually expressed as a percentage, return on investment (ROI) describes the level of profit or loss generated by an investment. When retained earnings (RE) are positive, they increase the organization’s equity.

An accountant can certainly perform bookkeeping tasks, but the title generally involves other responsibilities as well. An accountant may interpret the financial records put together by a bookkeeper to assess a company’s financial health. Becoming an accountant usually requires more training and education than bookkeeping but can be a good next step in your financial career. Some bookkeepers, especially those with bachelor’s degrees in accounting, may decide to become certified public accountants (CPAs). CPAs have similar job responsibilities to bookkeepers, but must also analyze data, suggest best practices, and make predictions.

• For example, consider a person who invests $10,000 in a company’s stock, then sells that stock for $12,000.
• Nearly all bookkeeping is done using computerized accounting software and programs, so bookkeepers should be comfortable learning new technology if not proficient in it.
• Both accounting and bookkeeping play an important financial role in business, there is a difference between the two.
• At the same time, the number of predicted bookkeeping job openings per year over that period is 197,600.

Opening a business bank account can make it easier to keep track of what funds go in and out. You can open a business bank account at a traditional bank, credit union, or online bank. You’ll need to provide your personal information, along with your business details, in order to open an account.

Get a bookkeeping certification.

Most businesses rely on both types of professionals for smooth business functioning. Then that information is provided to the accounting team to pull insights and help with bigger picture considerations. Both positions provide strategic advice and information to their clients. A bookkeeper may assist in creating budgets for you, whereas an accountant will advise the best way to bank reconciliation out of balance manage taxes and help advise what kind of corporation you should set up. When looking for a certified bookkeeper, first decide if you want to hire an independent consultant, a firm or a full-time employee if your business is large enough. Ask for referrals from friends, colleagues or your local chamber of commerce or search online social networks like LinkedIn for bookkeepers.

After completing your education, you can seek an internship and get on-the-job training to become a bookkeeper. However, it helps to have a two- or four-year degree in accounting, finance or related discipline. A bookkeeper can be the business owner, an in-house employee, freelancer or professional from an online bookkeeping service like QuickBooks Live or Bench. Some accountants have a bachelor’s degree in accounting but no CPA certification.

Bookkeeping works well as a stepping stone for professionals looking to gain hands-on experience and advance their careers in accounting. With relevant experience, continued education and certifications, you can qualify for higher-level accounting positions. With the help of accountants, business owners learn to understand their cash flow and how profitable they actually are. Even if you don’t have previous related experience, you can learn how to become a bookkeeper by taking courses. Comprehensive online courses like the Bookkeeper Launch will even teach you how to start your own bookkeeping business. At the end of the course, you’ll receive a professional certificate, which you can put on your resume to demonstrate your skills and accomplishments to potential employers.

If you have fewer transactions to process or have limited operations, then a bookkeeper could work on your books on a monthly basis. If you’re unsure, ask your prospective bookkeeper for advice about how often they think they would need to work to get your business’ financials in shape. What’s more, a bookkeeper can continue using the same accounting software that you already have, so hiring a new bookkeeper does not have to mean a transition over to new software.

Generally Accepted Accounting Principles

Double-entry bookkeeping records all transactions twice, usually a debit and a credit entry. Typically, double-entry bookkeeping uses accrual accounting for liabilities, equities, assets, expenses and revenue. Bookkeepers who are interested in switching jobs but do not have a college degree might consider becoming an EA after a stint with the IRS. This job doesn’t require a college degree, only five years of tax experience with the IRS.

What Is Bookkeeping?

If you are proficient and comfortable using mathematics and computing figures, plus punctual, organized, and detail-oriented, it is not hard to learn how to be a bookkeeper. Of course, a background in accounting practices will help you ride out a learning curve as a new bookkeeper. As a financial auditor, you may work as an external or internal auditor. If you are an external auditor, you will most likely have a job at a public accounting firm, and you will need to have a CPA license, plus a college degree, and often a master’s degree. There are critical differences in job growth and salaries between the two. Growth for accountants and auditors is expected to continue for the next several years.

Benefits of Working as a Bookkeeper

That way, should you need to hire a professional down the line, they will have visibility into the complete financial history of your business. The distinctions between accounting and bookkeeping are subtle yet essential. The two careers are similar, and accountants and bookkeepers often work side by side. However, significant differences exist, like work conducted in each career and needed to be successful. The following analysis compares the education requirements, skills required, typical starting salaries, and job outlooks for accounting and bookkeepers. The informal phrase “closing the books” describes an accountant’s finalization and approval of the bookkeeping data covering a particular accounting period.

Accounting software: An alternative to hiring an accountant or bookkeeper

A CIA is an accountant who has been certified in conducting internal audits. To receive this certification, an accountant must pass the required exams and have two years of professional experience. There are several types of accounting certifications that accountants obtain to expand their skill sets and gain positions within larger organizations. In addition to CPA credentials, other common accounting designations are chartered financial analyst (CFA) and certified internal auditor (CIA).

When should you hire a bookkeeper or accountant?

It is a more complete and accurate alternative to single-entry accounting, which records transactions only once. Equally, if you’re having trouble finding a good accountant or bookkeeper, ask around and see whether other small business owners use anyone that they would recommend. An accountant, on the other hand, can offer more complex compliance services, such as preparing and filing a business’ tax returns and accounts. Missing vital tax deadlines and being forced to pay penalties and fees are other signs that you may need to outsource your business’s day-to-day bookkeeping tasks to a professional.

This means that anyone, regardless of their knowledge or experience, can set up an accountancy practice and claim to be an accountant. So it’s worthwhile doing your due diligence and making sure that your accountant is properly qualified to advise you about your business’ financial affairs. Crucially, accountants are also a useful port of call when it comes to any tax-related queries you may have. Equally, even once your business is established, accountants can help provide advice when it comes to business expansion and tax matters relating to a large asset acquisition.