Career Advice: Accounting VS Bookkeeping

The professions of bookkeeping and accounting are distinct from one another. The question now is, what distinguishes them from one another? Bookkeepers are primarily concerned with maintaining records, whereas accountants offer a wider range of services, such as the preparation of tax returns and financial planning.

Your interests, skill set, level of education, personal values, and ambitions are all factors that should be considered while deciding which career path is best for you. This article on the site will provide you with a summary of the key distinctions between bookkeeping and accounting, which will assist you in making your choice.

When one is thinking about pursuing a career in either accounting or bookkeeping, it is critical to have a solid understanding of the differences between the two. Bookkeepers are responsible for recording the day-to-day monetary activities of an organisation.

Due to the abundance of intricacies and specifics involved, paying close attention to detail is of the utmost importance. In contrast, accountants tend to concentrate more on the whole picture. They evaluate and analyse the financial information that was recorded by bookkeepers at regular intervals and utilise it to carry out audits, prepare financial statements, and estimate the requirements that will be needed by the business in the future.

There is a lot of overlap between the two professions, and accountants and bookkeepers frequently collaborate on projects. These professions require many of the same abilities and characteristics from their candidates. However, there are important variations, such as the labour that is done in each trade and the requirements necessary to be successful.

The following discussion examines the similarities and differences between accounting and bookkeeping in terms of the educational requirements, skills necessary, typical starting salaries, and job outlooks.

Key Takeaways

• The terms "bookkeeper" and "accountant" are sometimes used interchangeably; nonetheless, these two occupations are distinct from one another and need separate skill sets.
• Bookkeeping is the typical starting point for careers in accounting because to the reduced obstacles to entry and generally satisfactory income in the field.
• Even though it is not officially compulsory, it is common practise for accountants to earn their Certified Public Accountant (CPA) certification as well as their Master's degrees.
• Bookkeepers are often believed to be responsible for organising all of the component parts into a position where accountants can access and organise them.

Necessary Education

There are no strict educational prerequisites must be met in order to work in either bookkeeping or accounting. You can find a lot of people working in bookkeeping, and even some accountants, who have only a high school diploma as their highest level of schooling. In contrast to professions such as law and medicine, the amount of schooling you need to obtain a licence is determined by state licencing boards. When it comes to accounting and bookkeeping, the businesses that are doing the hiring decide what qualifications candidates need to have.

Having said that, getting a job in accounting typically necessitates having a higher level of schooling compared to being a bookkeeper. The majority of accountants in the 21st century have at least a bachelor's degree. In addition, many hold advanced degrees, such as Master of Business Administration diplomas with specialisations in accounting or finance, or Master of Accountancy degrees.

You need to have completed at least 150 hours of postsecondary education in order to be eligible to take the Certified Public Accountant, also known as the CPA exam. This is a typical objective among many accountants. This requires an additional 30 hours of graduate work on top of a bachelor's degree; nonetheless, the majority of people who want to become certified public accountants go on to earn master's degrees.

If you can demonstrate that you are good with numbers and have a strong attention to detail, you can start a career as a bookkeeper straight after you graduate from high school. While they are still in school, many individuals who aspire to become accountants find work in the field as bookkeepers. In addition, bookkeepers who demonstrate exceptional performance on the job may receive promotions to accounting roles, even if they do not possess the amount of education that is normally prefered by the organisation.

Necessary Skills 

Bookkeepers and accountants spend their entire days dealing with numerical data. Consequently, individuals who dislike mathematics, struggle to keep their bearings when performing even the most basic computations, or are generally hostile to number crunching should not submit an application.

When we talk about analysing data based on numerical values, we are referring to a work function that is more typical of bookkeeping than accounting. Bookkeepers are responsible for a variety of responsibilities inside an organisation, including the recording of journal entries and the conduct of bank reconciliations. To be successful as a bookkeeper, you need an almost pathological attention to detail.

Careless mistakes that appear to be of little consequence at the time might, in the long run, result in far larger, more expensive, and more time-consuming difficulties. You need to have the ability to switch gears quickly. It is unusual for a bookkeeper to spend a whole eight-hour shift working on a single major assignment; rather, a typical workday consists of juggling five or six several smaller jobs.

If you want to be an accountant, you need to be able to crunch numbers, but it is far more important to have keen logic skills and the ability to solve problems that involve the bigger picture. Bookkeepers are responsible for ensuring that the smaller parts fit together correctly, whereas accountants use the information from those smaller parts to develop conclusions that are significantly more significant and extensive.

Initial Salaries

Starting pay can vary widely across the board in both of these fields, but particularly in accounting. Your starting salary as a first-year accountant will be largely determined by the precise accounting specialisation you choose to pursue. Although accounting has the potential to be a successful job over the long term, the majority of accountants, in contrast to corporate attorneys or investment bankers, do not command extremely high incomes in their early years in the profession.

The field of public accounting offers candidates fresh out of school the typical highest starting salaries. In particular, bigger pay can be seen at the "Big Four" accounting firms of Ernst & Young, Deloitte, KPMG, and PricewaterhouseCoopers compared to those at mid-size and smaller businesses. As an accountant for one of the Big Four, you may anticipate making between $50,000 and $60,000 during your first year on the job, depending on the city.

The Big Four public accounting companies pay their employees around 10% more than the middle-sized and smaller public accounting firms do on average. If you decide to work for a company internally rather than going into public accounting, you will have a far wider choice of starting salaries to select from. 2 When hiring young accountants with little to no experience, private enterprises typically do not pay more than the Big Four accounting firms do.

The majority of the time, bookkeepers are compensated on an hourly basis rather than receiving annual salary. The typical starting wage for someone who is new to the industry is between $19 and $20 per hour. If you work a standard week of 40 hours, this comes out to an annual salary of almost $40,000. 3

The benefit of receiving paid on an hourly basis is that you are awarded 1.5 times your typical wage for hours worked in excess of 40 in a given week. During the busiest season of the year, which runs from January to April, bookkeeping typically requires extra hours.

Job Prospects

During the Great Recession, accounting and bookkeeping saw a decline in employment, just like most other professions. However, they have made a strong recovery, and economic projections indicate that the area of accounting as a whole, which includes bookkeeping, will have a gain in employment of 13% through the year 2022. 4 This is a somewhat better performance when compared to the total growth rate that takes into account all fields.

Bookkeeping faces a particular issue that is comparable to that of operating a switchboard, word processing, and other fields in which software systems may do numerous jobs that were formerly performed by humans. While technology has reduced the necessity for individuals to perform the most menial aspects of bookkeeping, it has also increased the demand for workers with higher levels of education and experience who are able to run this technology effectively while also providing various benefit programmes.

Which Should I Pick?

Accounting is a field that, over the course of a lifetime, provides far greater opportunities for professional advancement and financial growth. The education that is necessary to be competitive in the field is of a higher quality, but the payback that can be expected in the long run can be significantly higher. Having said that, if you are interested in the industry but are not ready to make a full commitment and instead want to test the waters, bookkeeping is an excellent place to begin.

If you are searching for a job that pays well and offers some degree of job security, but you are not interested in pursuing bookkeeping as a long-term career, you could be an excellent choice for this position. Bookkeeping is a field that has significantly lower obstacles to entry, and the level of competition that you will face when looking for work is also lower.

Which Role Suits You the Best?

In comparison to bookkeeping, accounting offers stronger opportunities for advancement within the field of financial services, in addition to higher levels of both income and breadth. But if you want to get your career off to a speedy start with little to no experience, then bookkeeping is probably the best option for you to start with.

How Can You Make a Decision Using the Certificate IV in Accounting and Bookkeeping?

Certificate IV in Accounting and Bookkeeping credentials in both accounting and bookkeeping are included in this course. You will be able to become a more diversified financial professional if you have skills in both accounting and bookkeeping, and you will be better equipped to be a skilled bookkeeper if you have both of these skills. And if you later decide that you would rather be an accountant, you will have the option to switch your area of specialisation.

This course satisfies the educational standards set forth by the Tax Practitioners Board (TPB) in order to become a BAS agent. There is a requirement for prior experience.

The following are some of the professional results that can be achieved with this qualification:

• Professional bookkeeper
• Sub-contracting bookkeeper
• MYOB professional
• Payroll professional
• Accounts Payable and Receivable professional
• BAS Agent (subject to Tax Practitioners Board requirements)
• Accounts supervisor
• Accountant
• A bookkeeper might engage in Differences Between Bookkeepers And Accountants Senior Accounts Administrator

A bookkeeper will provide assistance with the continuous recording of financial transactions and activities that are necessary to ensure the smooth operation of the business. On the other hand, an accountant will examine the information that was provided by the bookkeeper, report on it, and provide financial advise based on the findings. Accountants will also have a solid understanding of the needs for taxation, and they will be best prepared to assist in this area due to their expertise in the subject.

As was said earlier, bookkeepers play an important role in the continuing process of maintaining your company's financial health.

The following are examples of some of the tasks that are routinely performed by the bookkeeper:

• Processing financial transactions include invoices, receipts, payments, and other types of payments
• Managing the payroll processing and maintenance of your system
• Putting together the preliminary financial statements
• Accounts need to be reconciled, and reconciliation reports need to be prepared.
• Keeping track of your outstanding debts and payments, also known as your accounts receivable and accounts payable, respectively, is an important part of running a successful business.
• Calculating GST
• Getting ready and submitting your BAS
• Developing, putting in place, and analysing the various accounting systems

A bookkeeper is able to perform a broad variety of different jobs, the most of which are associated with the continual upkeep of the company's financial records. These tasks may include the following:

Although an accountant will also be qualified to assist in these areas, it is crucial to be aware that the rates charged by bookkeepers and accountants are likely to differ. This is something that should be taken into consideration.

Although an accountant may be responsible for some aspects of bookkeeping, the majority of their time is spent providing strategic counsel and performing in-depth analyses for the company. An accountant will be able to provide financial estimates and guidance on the future financial aspects of your business by doing a review of the company's previous performance and comparing it to the forecast.

Additional services that an accountant might provide include the following:

• Planning and advice for taxes
• Assistance with the establishment of businesses
• Auditing
• Reporting and compliance requirements for corporations
• Advisory services for superannuation funds
• Financial management guidance

Why Hire a Bookkeeper?

A passion for mathematics is essential for a career as a bookkeeper because you will be in charge of managing the day-to-day financial operations of a company. You will be responsible for recording any financial transactions in the general ledger as well as ensuring that all financial statements are kept up to date and arranged in an orderly fashion. Because of this, a company is able to acquire an accurate picture of the state of its finances (including its sales, expenses, and bottom line) at any given point in time.

It's possible that as a bookkeeper, you'll also be responsible for sending invoices to clients, following up with customers who owe money, paying vendors, and processing payroll.

Although the size of this area has been the same in Australia over the past five years and is predicted to remain the same over the next five years, bookkeeping is still a very popular career. According to Job Outlook, it is anticipated that there would be approximately 10,000 job openings for bookkeepers per year across the many states and territories that make up Australia. Turnover among employees is primarily to blame for this situation.

Bookkeepers working full time can anticipate earning approximately $1,234 AU per week on average, which is little less than the 'all jobs' average of $1,460 AU per week. However, one's earnings potential may grow as one gains more experience. There is the possibility of working either full-time or part-time, but the reality is that the majority of people, or 67%, only work part-time.

The Work of an Accountant

You will be responsible for submitting accounts and working on tax returns if you decide to become an accountant. You will need to have the ability to interpret, analyse, and summarise financial information, as well as to report on such information. This enables firms to have a better understanding of their financial situations, which can be helpful when planning strategic moves. You could be able to assist in locating chances for cost reduction, ways to maximise profitability, and provide other expert advise on topics such as tax preparation or financial planning.

If you want to be an accountant, one of the "soft" skills you need to have is the ability to analyse data, but you also need to be able to communicate in a way that is both clear and effective, be methodical, and be willing to put in a lot of effort.

According to Job Outlook, the amount of accountants has been on the rise over the past five years and is projected to expand from 199,200 in 2018 to 207,200 by 2023. This is a growth rate of 5.6 percent. In addition, it is anticipated that each year there would be around 16,800 new job opportunities, which will be the result of both new job openings and staff turnover. This indicates that people may be interested in utilising your skills.

The average weekly salary for full-time accountants is approximately $1,600, which is much better than the salary average for all jobs. In addition to that, there is a possibility that this wage will go up when one gains more experience. In contrast to bookkeeping, where many people have worked only part-time, the majority of accountants (80%) are employed full-time.

Beginning a Career as an Accountant or Bookkeeper

You will need to get the necessary certifications if you want to pursue a career in accounting or bookkeeping, whichever path you choose to choose. In order to work as a bookkeeper, you are going to need to earn a formal qualification, such as a certificate IV or higher. In addition to this, you will need to possess professional qualifications as an accountant, preferably at the diploma level but no lower.

By completing the FNS40217 Certificate IV in Accounting and Bookkeeping offered by Open Colleges, you will acquire the fundamental abilities necessary to launch your career in the dynamic world of accounting. You will have the opportunity to learn a wide range of abilities, including accounting and financial management, bookkeeping, auditing, payroll processing, and many more.

You will gain memberships to the 'Australian Bookkeepers Network,' the 'Australian Bookkeepers Association,' and the 'Institute of Public Accountants' as a part of this study. In addition to this, you'll be given unrestricted access to the Reckon One accounting software.

Six Indicators That You May Have Bookkeeping And Accounting Problems

Small business owners who are successful in their endeavours are experts in their fields. The satisfaction of the customers has resulted in a steady stream of new business. But unfortunately, the world of finance is not always that bright and sunny.

This is the case because many owners of small businesses are terrified of keeping accurate books, which is hindering their companies' progress. Following is a list of six telltale indicators that you may be dealing with a fear of bookkeeping, as well as what you can do about it.

You Have a Tonne of Work, but There is No Cash in the Bank

Is it possible that you simply haven't been paid yet? Is it possible that you're just blowing too much money each month? Is it possible that you haven't sent an invoice yet? The lack of adequate cash flow is a common obstacle for developing companies. Because most people don't get paid until the project is over, you need cash to invest in order to keep your business solvent and fund its expansion. If you do not have effective cash flow management, it can be difficult to fund the next project and maintain the growth of your firm. This is especially true if you are required to make frequent loan repayments.

What you can do is keep a cash book or an analogous record to keep track of payments made into and out of your bank account. This will allow you to stay on top of your cash flow and will assist you in determining which areas of your bookkeeping require greater attention. In addition, a properly maintained cashbook can serve not only as a historical record but also as a useful tool for making projections.

You Keep Discovering Receipts in Odd Locations

They can be found in the glove compartment of your car, on your work desk, in your wallet, and in your pockets. You have no idea which ones are hundreds of dollars and which ones are just a few dollars each. On the other hand, if you don't organise and keep track of your receipts, you won't know how much tax you're likely to owe or what kind of rebate you'll be eligible for.

This is essential information to have when making projections on the amount of cash that will be available to the company in the years to come. The difficulty is that receipts are typically printed on paper, and it's possible that you won't be at the office when the receipts arrive. As soon as they begin to build up one on top of the other, they become a problem, and then procrastination sets in. "Shall we deal with the receipts? Not at this time, I have other, more important things to take care of!"

You have the ability to: The smooth operation of the firm and the avoidance of unsettling interruptions in cash flow can be helped along by paying consistent attention to receipts and maintaining a digital record.

Your Priorities Are Way Down on Invoicing

You're a valuable asset to your company and you keep everyone very busy. You have a healthy level of confidence in your customers, and you desire to maintain a positive relationship with them. Therefore, completing invoices may not always be at the top of the priority list. When it's not necessary, it's simple to overlook to do it. When you have to create an invoice, it might be difficult to keep track of how many have not been paid and how many are still outstanding. It will reflect poorly on your company if you continue to pursue payment from a customer for an invoice that has already been paid, but it will reflect even more poorly on your company if you fail to get them paid at all.

Your Bank Statement is Nowhere to be Found

Losing your bank statements is asking for trouble, especially if you don't appreciate unpleasant surprises. One of the most important responsibilities of owners of small businesses is to keep a close eye on the balance of their bank accounts. It helps mitigate the possibility of your bank committing fraudulent activities or making errors. Reviewing your financial accounts on a regular basis will not only help you understand where your money is going and when you are generating it, but it will also provide you an overall picture of how well your company is doing.

What you can do: If you have electronic banking, you don't have to wait until the end of the month to find out where you stand financially. When it comes down to it, if you maintain your banking within order and make it a point to never go over your credit limit, you will give yourself a lot greater chance of being able to obtain financing for the expansion of the firm.

Your Spreadsheets are Overly Complex

So, you've got things under control with the help of the computer at your company, right? Excel spreadsheets, if you must know. Are you as organised as you should be? Well, maybe. In order for spreadsheets to perform the tasks that you require of them, they must be thoughtfully built. Connecting the various facets of your company, such as tenders, sales, invoicing, cash flow, and banking, is necessary to achieve efficient management of your company's finances. That can refer to a variety of different formulas. It is simple to err, but not always obvious when one has done so. Spreadsheets are prone to inaccuracy since they require constant input of data by the user.

What you can do is study more user-friendly tools that can assist you with your bookkeeping rather than shifting your business administration to spreadsheets, which may merely result in a mess that is better organised on the surface.

You "Don't Have Time" To Manage Your Books

The final indication that you may be suffering from bookkeeping phobia is that you constantly persuade yourself that you do not have time to complete the task. Your company is doing too well, and you have too much work on your plate. You didn't get into business with the intention of becoming a number cruncher, did you?

What you can do is keep in mind that scheduling time in your schedule for bookkeeping can ultimately save you time by reducing the amount of time spent searching for and tallying up receipts. Spending less time tracking down invoices and less time trying to keep track of cash flow can save you time. In conclusion, being proactive will enable you to accomplish more of the job that you enjoy because it will free up more of your time.

Bookkeeping is an important skill to have if you want your firm to be successful, even if it wasn't the reason you got into business in the first place. The good news is that there is assistance available to make bookkeeping simple, speedy, and dare we say it, even enjoyable.