Understanding the difference between accounting vs bookkeeping is crucial for small business success. While both involve your finances, bookkeepers record transactions daily while accountants analyze that data to guide business decisions.
Since both bookkeeping and accounting are necessary for effectively managing your business finances and achieving growth, you need to understand exactly what each role does and which your business needs.
Here's the complete breakdown of accounting vs bookkeeping.
What is bookkeeping versus accounting
The difference between accounting and bookkeeping comes down to scope and complexity. Bookkeepers handle the detailed, day-to-day financial recording, while accountants use that data for strategic analysis and planning.
Let’s take a closer look.
What is bookkeeping?
Bookkeeping is the process of recording and organizing different financial transactions. These tasks are more granular, tracking every dollar spent on a daily basis. Bookkeepers focus on managing your accounting journals and ledger for each accounting period.
On a given day, bookkeepers will:
- Track and record daily and monthly journal entries
- Post credits and debits (bank reconciliation)
- Search for and resolve journal inconsistencies
- Complete payroll
- Prepare financial statements
What is accounting?
Accounting is the process of using financial data and statements to create financial models and influence business decisions. These tasks are more subjective and analytical, focusing on the overall financial health of your business.
Accountants spend their time:
- Reviewing financial statements
- Analyzing operating costs
- Performing financial audits
- Preparing and completing tax returns
- Assisting in financial forecasting and decision-making
Bookkeeper vs accountant: Required credentials and education
Not just anyone can fill these roles for your business. You need smart people on your side to ensure you have squeaky-clean books and a clear financial path.
Bookkeeping Credentials:
While bookkeeping doesn’t require any formal education or degree, having professional certifications adds credibility:
- American Institute of Professional Bookkeepers (AIPB) — Requires bookkeepers to have two years' worth of full-time experience, pass an exam, and keep up with continued education.
- National Association of Certified Public Bookkeepers (NACPB) — Requires those pursuing a Certified Public Bookkeeper license to have 2,000 hours of experience, pass an exam, agree to a code of conduct, and complete 24 hours of continuing education per year to maintain their license.
Regardless of their credentials, bookkeepers need to be extremely detail-oriented to effectively manage your accounting journals.
Accounting Credentials:
On the other hand, accountants need to have a Bachelor’s degree. Most accountants will pursue a Master’s degree in Accounting and/or become Certified Public Accountants (CPAs). To obtain this license, accountants must:
- Complete 150 relevant course hours, often a Bachelor’s degree and additional coursework
- Have 1-2 years of work experience
- Pass all four sections of the CPA exam
- Meet their state’s yearly minimum hours of continuing professional education
While not all accountants will be certified CPAs, there are certain tasks that, legally, only CPAs can perform. These include SEC reporting, external/SOC audits, and acting as your representative in IRS proceedings.
Accounting vs bookkeeping costs for small businesses
Cost is a major factor when deciding between in-house staff or outsourced accounting services. And based on the education requirements alone, it shouldn’t be surprising then that there are some differences in bookkeeping versus accounting costs.
According to the U.S. Bureau of Labor and Salary.com, here’s what to expect:
In-house salary expectations (2025)
Bookkeepers:
- Entry level: $35,000-$45,000
- Experienced: $45,000-$60,000
- Certified professionals: $50,000-$65,000
Accountants:
- Entry level: $50,000-$65,000
- Experienced: $65,000-$85,000
- CPAs: $75,000-$120,000+
Remember, full-time employees also require benefits, healthcare, and payroll taxes—typically adding 25-30% to the base salary cost.
Outsourced financial services
Outsourcing often provides better value because you:
- Access experienced professionals without full-time salaries
- Avoid employee benefits and payroll taxes
- Scale services up or down based on business needs
- Get both bookkeeping and accounting expertise from one provider
Bookkeeping versus accounting software
No matter who you hire, it's still wise to use available tech solutions to reduce mistakes and increase speed. That said, you'll need to understand the differences between bookkeeping and accounting software.
There are hundreds of products on the market that allow you to automate tasks, improve visibility, and get a better handle on your finances. The challenge is figuring out which type of software is best for your business.
Bookkeeping software features
Bookkeeping software focuses on basic financial management. Using these programs, you can:
- Record and categorize financial information
- Reconcile bank accounts
- Document transactions
- Pay your bills
- Generate and track invoices
- Manage expenses
All important tasks, but nothing too flashy.
Accounting software capabilities
Accounting software takes things a step further and lets you use your financial data to:
- Analyze your financial data
- Build cash flow analyses
- Put together vendor spend analyses
- Prepare for tax time
- Improve spend categorization
Do you need bookkeeping or accounting first?
This is one of the most common questions small businesses ask. The answer: bookkeeping always comes first.
You can't have meaningful accounting analysis without accurate, organized financial records. Bookkeeping provides the foundation that makes accounting possible.
The typical progression:
- Start-up phase: Basic bookkeeping to track income and expenses
- Growth phase: Professional bookkeeping plus periodic accounting analysis
- Scale phase: Ongoing bookkeeping with regular accounting insights and real-time data
But in the end both bookkeeping and accounting are important. Each piece holds merit for tracking your financial data and using it to scale your operations. What's most important is to unify all of your bookkeeping and accounting operations to get real-time data that you can use to make strategic business decisions.
When to outsource your financial operations
Consider outsourcing when you experience:
- Falling behind on financial record-keeping
- Making business decisions without current financial data
- Spending more time on books than growing your business
- Needing strategic financial guidance for scaling
- Wanting to reduce the cost and complexity of in-house staff
Get both bookkeeping and accounting in one place
When it comes to bookkeeping versus accounting, it’s not a matter of which one. You need to prioritize both to maintain accurate financial records and use that data to make strategic decisions within your business.
But these tasks take time and serious attention to detail –– often scarce when you’re busy running the rest of your business. Plus, if you’re trying to grow, basic bookkeeping and average accounting won’t cut it. You need a partner who can translate financial data into actionable strategies today, not two months from now.
Hiline helps you turn numbers into narratives for growth. From advanced bookkeeping to real-time outsourced accounting services, supported by HilineOS and our partnership with Digits, you can rely on our team to give you clear financial insights AND the strategic insights you need to scale — delivered in real-time, not months later.
Ready to get both bookkeeping and accounting handled professionally? Hiline provides comprehensive financial services that combine accurate bookkeeping with strategic accounting insights. Schedule a consultation to see how we can streamline your finances and fuel your growth.
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