The Difference Between An Accountant And A Bookkeeper In Mississauga

March 12, 2021 | Written by: Sohail Afzal

The-Difference-Between-An-Accountant-And-A-Bookkeeper-In-Mississauga

Many business owners, especially small business owners, get confused between an accountant and a bookkeeper. To many people, these are the same. But that is not the case. An accountant and a bookkeeper are two different job roles and need different expertise. But before we expound on the difference between an accountant and a bookkeeper, let’s first define these professions.

Accounting

Accounting is simply the ”language of a business”. It is the process of recording, analyzing, summarizing, and reporting a company’s financial position, which is usually carried out by professionals holding a license or certification.

Bookkeeping

Bookkeeping (a sub-field of accounting) is recording, storing, and retrieving a business’ financial transactions in a correct, comprehensive, and up-to-date manner. Bookkeepers do not require a license or a certification (like CPA in Mississauga) to carry out these seemingly simple tasks.

Bookkeeping Is The Building Block Of Accounting

As bookkeeping is part of the accounting process, often, bookkeepers and accountants work overlap.

A bookkeeper’s job pertains to recording and classifying a company’s day-to-day financial transactions, for instance, sales, purchase, expenditures, and payroll.

They focus on accurate and precise record-keeping of daily transactions rather than its interpretation or summarization.

An accountant specifically builds on the information and data provided to him by the bookkeeper, which he uses to draw a comprehensive picture of a business or an organization. Typically accountants will review and analyze financial statements prepared by a bookkeeper, summarize or turn this information into a report for higher management assist or share advice based on this report

The information provided by the bookkeeper will enable the accountant to voice the business’ financial position to its leadership. This requires each step from data-entry through to reporting to be as accurate and relevant as the other.

Do You Need A Bookkeeper Or An Accountant?

Understanding whether you need to hire a bookkeeper or an accountant for your business is essential. The choice is primarily based on the industry and the level of expertise required. For a small business, where you need to record daily transactions only, a bookkeeper, who will be less expensive to employ, might be all you need. However, suppose you are operating at scale or intend to operate at scale. In that case, you might be better off with an accountant who will have considerable insight on how to manage your financial state of affairs.

Some of the industry-related questions to consider when deciding who to employ:

  • What industry are you in?
  • How many employees work in your organization?
  • How large of an inventory do you manage?

Accountants are specially required for industries with complex financial systems and high volume transactions, such as taxation departments, banks, schools, etc.

Also, sometimes qualifications alone will not present you with the entire picture regarding the skills and expertise. A knowledgeable and skilled bookkeeper with years of experience on his resume might be in a better position to run the books for your business than a fresh-off-the-campus CPA.

When filtering applicants, try not to judge an individual based on their qualifications alone. Some questions to consider when reviewing a candidate:

  • What is their level of expertise? Certifications?
  • What services does the individual offer?
  • What services does the individual have experience offering?

 Conclusion

After reading this, you must be clear about the roles of a bookkeeper and an accountant and which one you need the most. This clarity will help you choose the right person for the job and help you save money. For more details, contact our experts.

Sohail Afzal CPA Toronto

Sohail Afzal, CPA, CMA, MBA

Sohail Afzal, (CPA, CMA, MBA) is the founder & CEO of GTA Accounting Professional Corporation. He is a highly experienced Chartered Professional Accountant and businessman himself and understands the challenges that many businesses face when it comes to cash flow management. As an experienced business consultant & tax advisor, he is helping companies grow by providing the technical, financial, and contractual information necessary for strategic decision-making.

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