When a new business owner asks me what the difference is between an accountant and a bookkeeper, my first response is usually, "About $140 per hour." Joking aside, the question is a good one and it is valuable to know the difference in order for you as a business owner to get the best value for your dollar.

As a small business owner you probably have some methods in place for tracking your financial transactions on a day to day basis. Whether you can effectively handle this job yourself, or hire a bookkeeper or accountant to do the job for you usually depends on the size of your business.

Simply defined, bookkeeping is the practice involved in the systematic recording of the transactions affecting the financial status of a business. The person doing that work is considered a bookkeeper. A bookkeeper may hold that title without benefit of any specific schooling or certification. Bookkeepers may become certified through The American Institute of Professional Bookkeepers, but Certified Bookkeepers can be hard to find. An individual with two or more years as a "full-charge" bookkeeper in a business similar to your own is usually qualified enough to handle a simple business.

An accountant usually holds at least four-year degree (and sometimes a Masters Degree, or Ph.D.). An accountant may wish to further certify him/herself by completing any variety of exams to prove his/her capability (i.e. CPA, CMA, etc.). An accountant's time is best used in the analysis and consulting of financial strategies of a business including procedures to lessen the risk of fraud. It is wise to consult an accountant once you have your business plans in place and are ready to implement a bookkeeping system. An accountant can help you put a sound system in place from the beginning and help you to keep it up-to-date as your business expands.

Hiring a bookkeeping service can often be a good solution for the small business owner. Most bookkeeping services charge a flat monthly fee. A good service will communicate well with your accountant so when tax time rolls around, the accountant will need to spend as little time as possible on your tax return keeping your accountant's fee to a minimum. Make sure you understand the reports you get back from your service. You want to make the most of the information to make productive decisions for your business. Also, even though most services are honest, it is a good idea to be on the lookout for fraud.

Both bookkeepers and accountants are important to your business. Knowing the difference between them can not only assure you of receiving the best information on which to base your financial decisions, but can also save you hundreds of dollars per year in fees.

-A. Kris Bell