Are you thinking to hire bookkeeper or accountant and not sure whom to hire? Our post will help you to understand bookkeeper vs accountant ‘s role in business, skill and quality required, the average pay of bookkeeper and accountant in the US, modern approach hiring bookkeeper or accountant.
Bookkeeper vs Accountant:
Who is bookkeeper?
Bookkeeper is junior level person at accounting department. He has following duties:
- Transaction entry in cloud accounting software – bookkeeper does day to day entry of purchase, sales, return of goods in cloud accounting software.
- Proper maintenance of accounting data is important in business. Bookkeeper takes care this task. He maintains records of business in the separate storage facility. Popular storage tools are Google cloud, Dropbox, hub doc, receipt bank etc.
- The bookkeeper does reconciliation of bank transactions on the daily or weekly basis.
- He does basic journal entries.
- Some business owners allocate bookkeeper task of payment of bills
- Account payable management: It covers data entry of purchase invoices, reconciliation of account payable, payment to creditors, cross-check of invoices, data entry of discount received.
- Account receivable management: It covers verification of invoices with the provision of services of goods, issuance of invoices, follow-up of receivable, month end statement generation, written off bad debt, setting up credit limit, email the statement to debtors.
- Payroll Run: the Big organisation has the separate employee who manages the payroll. In small organisation, bookkeeper do payroll at month end and release employee payment.
Qualification and skills expected from Bookkeeper:
- Basic accounting knowledge
- Minimum graduate at commerce knowledge
- Accurate in work
- Detailed oriented
- Regular in work
As per indeed, bookkeeper charges average $20/hour in USA. If you are hiring an experienced bookkeeper, you may be required to pay around $30.
As per payscale, bookkeeper charges average $40773/ annum. However, if your business is too complicated and you want to hire an experienced bookkeeper, the salary will be around $60000/year.
Accountant in business:
Accountant is the senior level person in accounting and finance department. There might be two positions of the accountant. Senior accountant and Junior accountant (Assistant accountant).Junior accountant tends to help senior accountant where there are the heavy workload and large data to process. Generally, in small business, there is only one accountant.
Accountant should have the master degree in the commerce. it is not required that he is the CPA but it is recommended that he has the strong knowledge of accounting principle and he is able to align it with your country’s tax rules.
Accountant’s roll in business:
Accountants have following duties in business.
Preparation of tax returns and GST returns: This can be optional. Many organization expects an accountant to help with taxes. Others hire CPA for tax compliance. If your accountant has knowledge of local taxes, it is plus point. However, the accountant with sound tax knowledge will charge you high fees.
Adjusting entries at month end: It is general practice to close books at the end of the month and do the adjusting entries. Accountant does this work.
Supervision of work of bookkeeper: Work done by bookkeeper is supervised by an accountant. Accountant also guides bookkeeper with bookkeeping queries. Sometimes, accountant trains bookkeeper for the work to be done and explains the bookkeeping processes in business.
Produce reliable and accurate reports: Most important task of an accountant is to produce reliable and accurate accounting data to CPA or owner of the business. He needs to check accuracy, the reliability of records and make sure that accounting is align with GAAP principles.
Supply information to CPA/ Tax Accountant: After month end, the accountant is required to send accounting reports to CPA so that he can prepare sales tax/ BAS returns.
Qualification and skills expected from Accountant:
- Sound accounting knowledge
- Minimum post graduate degree at commerce knowledge
- Basic tax knowledge
- GAAP knowledge
- Auditing skill to check records at month end
- Reliable and accurate
- Attentive to detail
- Time manager
As per usnews, the average salary of full-time accountant is $68150. It increases to $90670 when you tend to hire an experienced accountant.
If you have a small business, you can hire service of an accountant on an hourly basis. It may cost you $29.54 to $44 per hour as per payscale.
Difference between bookkeeper and accountant:
There is a thin line between the scope of work of bookkeeper and accountant. Some organization hires one person as bookkeeper and accountant. That’s also ok for small businesses. Sometimes work of bookkeeper and accountant overlaps each other. However, cross-checking is always required to avoid errors and fraud in business.
|Education||Bachelor degree||Master degree|
|Skill||Bookkeeping, Basic accounting||Strong accounting skill, GAAP, basic tax knowledge, basic audit skill.|
|Experience required||1-3 years||More than 3 years|
|Per hour rate||$20||$35-$40|
|Supervised by||Accountant||CFO / Business owner|
How to arrange bookkeeping and accounting function to avoid fraud in a large organization:
As per the survey of PWC at 2018, around 49% of the global organization has faced economic crime in the two years. Large organizations are facing fraud due to the high volume of data and weak accounting systems. The fraud can be avoided by implementing “maker and checker” system in the accounting function. Clear segregation of duties for bookkeepers and accountants are required. Below, you can find sound bookkeeping and accounting practices in business.
- Data entry in system
- Loading of bills in payment processing system
- Preparation of draft reports
- Payroll run
- Bank reconciliation
- Review of purchases and sales periodically
- Approval of bills’ payment
- Approval of reports and supply to CPA
- Payment of wages and review of payroll.
- Surprise audit of books by an accountant.
Note: The work of accountant can be supervised by owner or CFO.
who should you hire- Bookkeeper vs Accountant and when?
Every business has different accounting needs and different business situation. Who should i hire- accountant or bookkeeper or both? This is the question arisen in small business owners mind.
There are three options here:
For startups :
Do bookkeeping yourself and hire an accountant ( Hourly basis):
If you have a very small business and have extra time ( 3-4 hours/week), you can do bookkeeping yourself and hire an accountant for accounting work.
However, you should have basic accounting knowledge to do bookkeeping. You can join our free small business accounting course to have basic knowledge of accounting.
For mid-sized business:
Hire bookkeeper (Full time) and accountant ( Hourly basis):
For medium-size business, you require bookkeeper and accountant’s service. With the growth of the business, it is not wise to do bookkeeping entries in the cost of marketing and strategic work.
You can hire bookkeeper on the full-time basis and get service of accountant at month end.
For large business:
In the large business, you have thousands of transactions per month. It is good practice to hire bookkeeper and accountant on the full-time basis. Here, data accuracy is vital. One mistake costs you around hundreds of dollars.
Modern approach: Outsource bookkeeping and accounting process:
With the power of cloud-based accounting, now you can outsource bookkeeping and accounting process online.
Following two articles help you to understand outsourcing concept:
There are many benefits of outsourcing bookkeeping and accounting function in business. Some are
- Reduction in investment in hardware
- No space required for an employee
- Pay for availed service only. No monthly burden of salary
- Expert service at a competitive rate
- No training required
- Most popular option for small and growing businesses
Finsprout is the agency providing account outsourcing service. We have a team of bookkeeper and accountant who works together to manage bookkeeping and accounting of businesses.
Following chart will help you to understand cost reduction due to the outsourcing of accounting to Finsprout:
|Business size||Bookkeeper Charges||Accountant Charges||Outsourcing to Finsprout- $15/hour||Saving|
|Start ups||–||$35*15 hours=$525||$15*15 hours = $225||$300|
|Growing business||$3500 ( 175 hours)||$35*25 hours=$875||$15*200 hours=$3000||$1375|
|Large business||$4500 ( 175 hours)||$6000 ( 145 hours)||$15*320= $4800||$5700|
Business success depends on the small decision taken at various stages of business. Today we have various options available to get bookkeeping and accounting service. Always choose the quality of work with cost optimization. If outsourcing sounds great to you, contact us here and we will be happy to help you in building strong accounting system for you.