Jitasa Nonprofit Blog

Fulfilling Your Accounting Needs: Bookkeeper VS Accountant

You may be reflecting on the past year and assessing your goals for 2017. If outsourcing your accounting functions are part of your reflection, it’s a fantastic idea to know exactly what your nonprofit’s needs are.

If you’re unfamiliar with the nuances of accounting, you probably don’t realize that bookkeepers and accountants are not interchangeable. The fields are so often lumped together that their differences can be unclear. However, they are in fact separate entities with separate duties; depending on your organization you may need one and not the other. Below you’ll find a brief description detailing the duties of each position. You can use this to decipher which option best suits the needs of your nonprofit.

Bookkeeping

  • While bookkeeping is in no way lesser than accounting, the functions involved in it are fewer and require limited detail. A bookkeeper’s duties include:
  • The recording of daily activities
  • Basic data entry
  • Recording one side of a transaction. For example, a bookkeeper will pay bills such as rent
  • Write checks and make deposits
  • Process payroll
  • Allocate costs
  • Recording transactions when funds change hands
  • Providing all bookkeeping records to an accountant for further review.

A bookkeeper is not required to analyze transactions, and often lacks the experience and education to grasp the concepts required to do so. Instead, they focus on laying the foundation for accounting processes that will follow. They do this through the act of data entry, inputting information provided by their client/employer.

Accounting

Working as an accountant requires a four year education at minimum. This degree is almost always in the field of accounting. Accountants also have the ability to take a specialized test that proves their knowledge and increases their credibility as an accountant. Passing this test will give an accountant CPA status, and endorses them as a “certified public accountant. You can think of your accountant as a numbers detective, as this position requires extended detail and analytics. An accountant will:

  • Review all accounts
  • Balance both sides of a transaction (credit and debit sides)
  • Determine how a single transaction affects your accounts.
  • Act as your detective, understanding the “why” of your accounting situations and explaining it clearly.
  • Prepare detailed reports explaining your transactions, usually on a monthly basis
  • Compare your actual expenses/income to your budgeted expenses and income
  • Compare your current actual expenses and income to previous years’ expenses and income
  • Prepare your books for audit and yearly 990
  • Reconcile all bank accounts
  • Review all bank accounts to ensure they meet GAAP compliance standards

In addition, an accountant will interpret, classify, and summarize your financial data correctly. They ask themselves questions like:

  • “Does this look correct?”
  • “Is there a better way to present this?”
  • “Should this be allocated with a different method?”
  • “Have we associated the right expense to the correct category?”
  • “Does this budget accurately portray what we expect to happen?”

Accountants view bookkeeping items with the thought of compliance and the long term of your organization in mind. Their concern is that you maintain your 501c3 status by submitting a correct 990 on time, and that you pass your routine audit without difficulty.

Renata Poe Massie, Content Creator for Jitasa