‍What is a bookkeeper?

A bookkeeper records the day-to-day financial transactions of their current company. Bookkeepers must have excellent attention to detail when handling thousands of financial transactions. 

 Bookkeepers usually have these skills:

• Basic accounting knowledge 
• Great accuracy
• Excellent organizational skills
• An Associate's Degree in Accounting
• Knowledge of some accounting software (QuickBooks, Xero, Zoho, etc.)

Back in the day (in this case, 2600 BC), bookkeepers kept their records on small slabs of clay. These days, we use slightly more advanced technology. You will most likely use accounting software on a laptop or desktop computer. Many bookkeepers also use specialized software to significantly enhance efficiency in managing estimates, invoices, and payments.

Bookkeepers typically have a two-year associate's degree. However, they are technically classified as accountants. So, not all accountants are bookkeepers, but all bookkeepers are accountants.

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What does a bookkeeper do?

The duties of a bookkeeper typically include data entry, checking their data against other documents, and producing regular reports on their company's financial position.

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A bookkeeper's job might also have these optional duties:

• Filing business taxes
• Creating, sending, and paying invoices
• Handling payroll
• Assistance with advanced documents (income statements and balance sheets)

A bookkeeper's duties are part of the accounting cycle, an eight-stage process every business needs to follow to maintain financial compliance.

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Bookkeepers handle the first six of eight steps below:

1. Tracking financial transactions.
2. Recording them by the time they occurred. 
3. Posting them to the company's transaction summary. 
4. Creating an info sheet for the current accounting period (can be monthly, quarterly, manually, etc.).
5. Reviewing transactions on a worksheet.
6. Adjusting journal entries as needed.

Accountants typically handle the final two steps in the process. 

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What is an accountant?

Much like a bookkeeper, an accountant maintains financial records. The significant difference is that accountants are tasked with interpreting financial data. As a result, accountants require a four-year bachelor's degree in accounting. Accountants might take this a step further by registering as a CPA, or Certified Public Accountant. CPAs meet state licensing requirements to become publicly practicing accountants. However, you do not need to be a CPA to be an accountant. 

Bookkeepers, in contrast, typically only need to gather the data. While the bookkeeper can compile and gather information, the balance sheet and detailed financial statements are produced by those with more experience and education. Another crucial aspect is converting bank statements from PDFs, which can require a high degree of precision due to their complexity and detail.

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What does an accountant do?

An accountant might handle everything that a bookkeeper does (see above).
However, all accountants must be qualified to undertake the last two steps of the accounting cycle:

• The creation of financial statements (balance sheets, income statements, and cash flow statements)
• The closing of financial statements for a certain period (finalizing and approving that account tracking is accurate for prior cycles)

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Accountants have the duty of creating information sheets from data typically acquired from bookkeepers. They then check this data against other documents — for example, bank statements — to ensure everything is correct. When accountants "close" an account, it means they are fully confident of its accuracy for official reporting.

Because of this additional skill set, accountants are more likely to take on leadership roles. If you have a financial department in your company, it is most likely run by someone with an accounting background. 

All of this continuous checking and rechecking of information brings us to a quote from Rich Dad Poor Dad by Robert T. Kiyosaki:

"The word accounting comes from the word accountability. If you are going to be rich, you need to be accountable for your money."
- T. Kiyosaki:

Regardless of how much money you make, accountants are often the last line of defense against financial blunders. Kiyosaki recognizes this, reminding you of the importance of accurate financial reporting. 

Accountants know this, which is why they jump over numerous hurdles to get to where they are today. Your financial data really must go through eight layers and (at least) two people. The use of the complete accounting cycle is necessary to maintain accurate records. 

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What is the difference between a bookkeeper and an accountant?

Bookkeepers have an associate's degree; accountants have a bachelor's degree. This extra education gives a more vital skill set for interpreting financial data. Another way to look at this is through the scope: bookkeepers deal with daily finances while accountants work with larger scales (yearly, past five years, or decades). 

Earlier, you might recall us stating that all bookkeepers are accountants, but not all are bookkeepers. Bookkeeping is often the first step towards taking an accounting role. An accountant's early workdays might be filled with data entry and tracking. They take this skill set with them to gain a firm understanding of how financial monitoring works.

Some associate's degree level programs still have you manually enter numbers on a physical spreadsheet. To do this in real life is bookkeeping, although you are more likely to do it with something like Quickbooks. 

Smaller businesses might utilize accountants in bookkeeper roles, handling all financial data. Companies that choose to do the opposite (using bookkeepers in accountancy roles) are making a big mistake. If you have to hire one financial expert, choose an accountant. 

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One of the more common financial duties in a business is payroll. 

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What is payroll?

Payroll is the process a company uses to pay its employees. The process includes tracking time, accounting for bonus pay, and making on-time distributions. Another big part of payroll is calculating taxes. 

The payroll department of your organization is legally required to report the following:

• State/federal tax withholding
• Health insurance
• Contributions to retirement (401k) from both employee and employer
• Union dues (if applicable)
• Medicare taxes 
• Social security taxes 
• Sick days
• Holiday pay
• Vacation time
• Court-ordered withholdings (e.g., you have an employee who owes child support) 
• Overtime
• Commissions and bonuses

The payroll department handles the reporting and payment of those taxes. Reporting and paying them accurately depends on employee data (through form W-4) and how much they make (what tax bracket they fall into).

For example, you'll take more out of a single earner of $100k  per year than a family of four who earn $50k.. You also tax overtime pay differently. So payroll includes many financial variables. 

One of the significant variables might be the state you operate in. So take some time to do some research regarding your state's laws for scheduled tax payments.  

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Who does payroll?

The official title for people who handle payroll is payroll clerks. Payroll clerks are a specific type of bookkeeper, as managing payroll is an early stage of the accounting process. However, the entire payroll department of a large corporation might consist of people from Human Resources (HR) and accounting. 

Because of the crucial human element of payroll, accountants from within HR might handle it. After all, receiving payment is a pretty big deal to people who work. 

Employees with payment discrepancies need delicate handling, which is a big part of the HR skillset. Accounting professionals might not have this same ability unless they've worked the necessary positions. On the other hand, HR professionals might not have the required skills to handle payroll accounting. 

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What is payroll accounting?

Payroll accounting is the tracking of data related to employee compensation. The accounting half stops once time tracking is done, as the accounting half doesn't handle paying employees.

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However, it does track this data:

• Gross payouts (salaries, wages, and bonuses)
• Tax withholding (state and federal)
• Withholding of some finances for savings (401k, Health Savings Accounts)
• The cost of employee benefits (e.g., health insurance, dental plans, worker's compensation)

Much like other accounting forms, payroll accounting follows the complete accounting process. However, the payroll department might not have as much need for some financial statements (e.g., a statement of cash flows). 

Instead, trial balances showing the total number of employee expenses will be produced and reviewed by accountants. Financial decisions regarding a company's tolerance for additional employees might be made using this information.

Because it is just one aspect of an accounting process, payroll accountants often report to the head of their payroll department. Information from the payroll department will go to the company's overall financial officers. From there, a complete picture of a company's expenses and earnings can help locate apparent problems of identifying high-performance areas. 

Remember that regardless of what type of accounting you do, the information does not exist in a vacuum. Corporations have sometimes found that increased wages save money by reducing high retraining costs.

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How do you do payroll accounting?

Much like all types of accounting, it begins using the bookkeeping process. So you need to establish a system for regularly acquiring data on employees. After, you need to process that data.

Here are the general steps you need to follow:

1. Gather personal data on employees through I-9 forms and W-2 forms. Also, take the time to ask them what benefits they want.
2. Track this data and apply wages to them based on employment terms. 
3. Withdraw from salaries depending on desired employee benefits and personal data from W-2 and I-9 Forms. 
4. Calculate taxes based on income bracket, state laws, and federal requirements.
5. Apply this information to the overall business (general ledger) to ensure legal compliance and accurate information for proper financial decision-making. 

As you might imagine, there is a lot to go through. Thankfully, payroll software for accountants helps the process. 

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What is payroll software for accountants?

Payroll software for accountants simplifies the data tracking process. It handles automated reporting of taxes, payout to employees, and production of information that entire departments previously held. 

In our earlier section on the difference between a bookkeeper and an accountant, you recall that bookkeepers handle a lot of manual data entry. Much of that manual data entry can now be left to automated systems. Push Operations, our automated system, is one example of this in action.

Even the best bookkeepers are prone to human error. Push Operations is driven by an automated platform that eliminates that potential for error. With the direct translation of data between systems, you don't need to worry about something being incorrect. 

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What you should look for in payroll software for accountants.

Here are some of the top things to look out for in payroll software for accountants:

• Real-time payroll reporting (so you can access data at any time)
• Flexible wage tracking to help you manage multiple employee types
• Management of various locations for scalability
• The ability to quickly locate and produce required tax forms (T4, W-2, W-4, and I-9)
• Quick remote access from anywhere in the world 

Our sister article on looking for the best payroll software for accountants reminds you of more reasons this can help. Automated tracking of features removes the risk of human error as well as the need to pay another employee.. 

If you are a CPA, you already know that costs are a concern. So instead of giving yourself more worries, put part of your business in the hands of trusted automation. 

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Conclusion

When it comes to the difference between a bookkeeper and an accountant, there’s a lot of crossover. 

Bookkeepers handle more straightforward data entry jobs that require great attention to detail. The early days, before software automation, required them to be incredibly focused when putting in data, especially when handling employee payroll.

Accountants need to be able to interpret large-scale financial data. They must be sure that the information they gather and interpret is accurate. Inaccuracies can lead to fines and federal or state backlash. 

Both roles can benefit from the use of payroll software for accountants. Having an automated system that is regularly backed up takes a lot of worry and work hours out of the process. Alongside assigning the proper duties, knowing the differences between different roles can make any accounting process more efficient. 

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Do you find  financial industry jargon confusing? Bookkeeping? Accounting? Aren’t they one and the same thing? Well, not really — and in this blog post we’re going to explore the differences between bookkeeping and accounting, and how they apply to payroll needs.