What Does A Bookkeeper Do vs. Accountant In Minnesota?

Understanding the difference between bookkeeping and accounting in Minnesota. Learn about the function, role, and pricing of each service.

In this market economy, a bookkeeper vs. an accountant can be a very confusing question to have asked of a business partner, when trying to decide on the best role for handling financial management decisions. Both are capable of many things, and to the untrained eye, seem to do very similar tasks, but what makes one stand out over the other?

Bookkeeping is a transaction based and administrative position that handles the everyday task of recording financial transactions. These may include, but are not limited to their purchases, receipts, sales, and payments. Accounting is a bit more subjective, providing business partners with financial information based on data taken from their bookkeeping.

Below are a few topics of interest regarding either bookkeeping or accounting, and their roles they play, as well as some helpful guidance between the two. Defining each, providing knowledge and education of their roles to better aid a business in deciding which is needed, is the ideal purpose.

The Function Of Bookkeeping

The main idea of bookkeeping services is the complete and accurate record of financial transactions in a well kept and logical manner. The secondary idea is to discover the financial effect of recorded transactions on the financial statements.

The Function Of Accounting

The main function of accounting services is to store and analyze financial information and manage monetary transactions. Accounting is also used to prepare financial statements for a company's employees, employers, and clients. Accounting can also serve to function to ensure the payment of equity or money into and out of a company.

The Bookkeeper Role vs The Accountant Role

Bookkeeping is the first part of the accounting process, so the work of a bookkeeper and accountant often overlaps. Bookkeeping focuses on recording and organizing financial data, while accounting is the interpretation and presentation of that data.

What Does a Bookkeeper Charge?

Bookkeeper rates tend to vary depending on the different business sizes, industries, and financial services that are needed. In-house bookkeepers can charge anywhere from $18-23 per hour, depending on experience. Outsourced bookkeepers can be another choice with monthly bookkeeping charges starting from a simpler $99 per month. However, all of this can vary greatly state to state, as the lowest paid state being West Virginia with a mean salary of $34,550 all the way up to Alaska, with a mean salary of $48,640 on average.

What Does an Accountant Charge?

An accountant tends to be at a higher level than a bookkeeper, skill wise, and typically while in an organization a bookkeeper would report to the accountant. On average, accountants nationwide normally cost anywhere between $30 and $300 per hour, depending on many factors. Accounting costs are generally determined by the size of a business and their accounting needs.

First, let’s define the processes behind the professions.

The Role of the Bookkeeper

Bookkeepers are responsible for entering the company’s financial data into the books and keeping the records accurate and up to date. Bookkeeping is a very transactional process that involves tracking all of the income and expenses, paying bills, invoicing, tracking payroll, etc.

The Role of the Accountant

Accountants generally oversee the bookkeeper and may perform billing, make  ledger entries, review accounts payable activity and direct payroll. At the mid-level position in the accounting department, accountants report to their accounting managers, company controllers or financial directors, essentially forming middle management of financial portfolios. However, accountants usually have a four-year college degree and have a greater level of skill and experience than bookkeepers.

The Role of the Controller

The controller creates the end of month closing schedules. They must communicate their responsibilities and expectations to the company so that everyone understands their roles within the business. Once the data has been processed, it's up to that controller to ensure the accuracy and reliability of each financial statement presented. The controller then ensures that the company’s accounting systems and functions all comply with overall accepted accounting principles, help to reduce their financial risks, and manage cash flow accordingly.

The Role of the CFO

The Chief Financial Officer’s primary responsibility is to be able to project the long-term financial target of the business and help it to thrive based on their analysis of the market. The chief financial officer tends to oversee the controller’s duties helping to ensure accurate and timely reporting is available to the business and their stakeholders.  Chief financial officers also manage investments, capital gains and debt, and equity management. In essence, they are responsible for both the company’s current financial well being as well as the company’s financial future status.

When to Hire Either a Bookkeeper vs. Accountant?

It can never be too early to approach an accounting professional. Business professionals who hire financial support in the early stages of their company will rarely regret that decision. An accounting professional can help a business partner create a plan which ultimately saves  time and money in their future. Having the support of a bookkeeper will also free up company time, allowing a business to focus on the company and its productivity. However a business wants to proceed, choose what makes the most sense for that type of business plan. Don’t forget, if along the way there is something more needed or the plan changes, simply pivot as the need to hire the other might require.

To Sum It All Up...

Whether a company hires an accountant, a bookkeeper, or both, it's very important that the individuals are all qualified by asking them for client references and checking them for certifications as well as performing screening tests prior to hiring. Please remember, it is always an option to keep it in-house, however, outsourcing a company’s financial services to bookkeepers and accountant specialists can ultimately save a business both time and money as well as effectively raise productivity and organization to the flow of data and work load that the company’s efforts might need to be directed through. An open minded business is one that looks at all opportunities, both big and small, regardless of the size of the company, a need is still a need, and no two problems may have the same answer.

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