The distinctions between accounting and bookkeeping are subtle yet important to understand when considering a career in either field. Bookkeepers record the day-to-day financial transactions of a business. Accountants, by contrast, focus more on the big picture.
- Although they are job titles used interchangeably, bookkeepers and accountants are different with different requirements.
- Bookkeeping is where accountants generally start their careers as the barriers to entry are lower and pay is decent.
- Accountants, though not formally required to do so, traditionally acquire their CPA certification as well as their Master's degrees.
- Bookkeepers can be considered as the ones who line up all the small pieces into places where accountants view and arrange those pieces.
Bookkeeper vs. Accountant
With bookkeepers, there are a lot of minutiae involved, and keen attention to detail is paramount. Meanwhile, accountants tend to use the bookkeeper's inputs to create financial statements and, periodically, review and analyze the financial information recorded by bookkeepers. They conduct audits and forecast future business needs.
The two careers are similar and accountants and bookkeepers often work side by side. These careers require many of the same skills and attributes. However, important differences exist like work conducted in each career and what is required to be successful. The following analysis compares the education requirements, skills needed, typical starting salaries, and job outlooks for accounting and bookkeeping.
Neither accounting nor bookkeeping imposes hard-and-fast educational requirements. You can find plenty of bookkeepers and even some accountants who have no further education than a high school diploma. Unlike careers such as law and medicine, in which state licensing boards determine how much education you need, with accounting and bookkeeping, the companies doing the hiring decide what to require of candidates.
That said, landing an accounting job requires, in most cases, more education than becoming a bookkeeper. In the 21st century, most accountants hold bachelor's degrees. Many hold advanced degrees, such as MBAs with accounting or finance concentrations, or they have Master of Accountancy degrees. To sit for the Certified Public Accountant (CPA) exam, which is a common goal of many accountants, you must have a minimum of 150 postsecondary education hours. This is a bachelor's degree plus 30 hours of graduate work; most CPA candidates go ahead and finish their master's degrees.
You can become a bookkeeper right out of high school if you prove you are good with numbers and have strong attention to detail. In fact, many aspiring accountants work as bookkeepers to get a foot in the door while still in school. Additionally, bookkeepers who excel at their jobs are sometimes promoted to accounting positions, even if they lack the level of education the company typically prefers.
Accountants and bookkeepers work with numbers all day long. Therefore, those who do not like math, get confused easily when making simple calculations, or are generally averse to number crunching should not apply.
Speaking of number crunching, that job duty is actually more common to bookkeeping than to accounting. Companies task bookkeepers with tasks such as recording journal entries and conducting bank reconciliations. As a bookkeeper, your attention to detail must be almost preternatural. Careless mistakes that seem inconsequential at the time can lead to bigger, costlier, more time-consuming problems down the road. You must be able to multitask. Rarely does a bookkeeper work on one big project for an eight-hour shift; rather, a typical workday involves juggling five or six smaller jobs.
As an accountant, you also have to crunch numbers, but it is much more important to possess sharp logic skills and big-picture, problem-solving abilities. While bookkeepers make sure the small pieces fit properly into place, accountants use those small pieces to draw much bigger and broader conclusions.
Both careers, accounting in particular, cover a broad gamut of starting salaries. How much you make as a first-year accountant depends in large part on the specific career path you pursue. While accounting can be a lucrative long-term career, most accountants, unlike corporate attorneys or investment bankers, do not command huge salaries during the first few years.
Public accounting generally pays the most to a candidate right out of school. In particular, the Big Four firms of Ernst & Young, Deloitte, KPMG, and PricewaterhouseCoopers offer larger salaries than mid-size and small firms. Depending on the city, you can expect to earn between $40,000 and $60,000 your first year as a Big Four accountant.
Mid-size and small public accounting firms pay, on average, about 10% less than the Big Four. If you choose to work for a company internally instead of doing public accounting, the starting salary range is very broad. In most cases, private companies do not pay more than the Big Four for young accountants with little experience.
Bookkeepers often get paid hourly wages rather than annual salaries. The average wage for someone new to the business is $20 per hour. This is the equivalent of around $40,000 per year, assuming a 40-hour workweek. The advantage of hourly pay is you receive 1.5 times your normal wage for hours worked more than 40 per week. In bookkeeping, extra hours are common during the busy season of January to April.
Growth for accountants and auditors is expected to continue for the next several years. The Bureau of Labor Statistics segment to grow jobs by 4% from 2019 to 2029. However, bookkeeping and accounting clerk jobs are expected to go into decline, with the BLS projecting a 6% fall in jobs over the same period.
The BLS notes that job growth for accountants should track fairly closely with the broader economy. However, bookkeepers will face pressure from automation and technology that will reduce the demand for such workers.
Which One to Choose?
For a long-term career, accounting offers much more upward mobility and income potential. The education required to be competitive in the field is greater, but the payoff down the road can be considerably higher. That said, bookkeeping is a great starting point if you are interested in the field but not fully committed and want to test the waters.
You may also be an ideal bookkeeping candidate if you want a good job with a respectable wage and decent security but may not be looking for a long-term career. Bookkeeping offers much lower barriers to entry, and the competition you face in the job search is less fierce.