Bookkeeper vs. Accountant - Whats the Difference?

I have been asked recently by several people what the difference is between a bookkeeper and an accountant.

The two are very similar, in fact there is a lot of overlap between the two rolls.

The following definition of a bookkeeper has been taken from the Canadian Bookkeepers Association.

Bookkeepers maintain complete sets of books, keep records of accounts, verify the procedures used for recording financial transactions, and provide personal bookkeeping services. The term bookkeeper refers to a person who can complete a full set of books up to and including a trial balance.

It is also true that accountants do many of same set of activities.

One may also think that the main difference is price. That may be true in part because the whole range of activities that bookkeepers do is very broad, and the education and training for a bookkeeper may be as little as work experience only all the way up to university degrees. The bookkeeper may only be doing data entry or the bookkeeper may be doing complex tax planning. Obviously the education and length of time that a bookkeeper has been practicing the trade will significantly influence how much a bookkeeper is paid. Many bookkeepers earn in the $30 - $50/hour range as freelance contractors. They may earn as little as $15.00/hours as data processors or they may earn as high as $85.00/hour for senior skill sets backed by certifications, and this amount would certainly be comparable to a designated accountant.

The one area that distinguishes accountants is their legal authority to perform Audit and Assurance Engagements, this ability is contained in the legislation of the various provinces granting the this authority to the Chartered Accountant, and in some provinces also the Certified General Accountants and the Certified Management Accountants.

When many small business owners go looking for day to day bookkeeping they often go directly to a designated accountants not realizing that they are probably going to pay a significant premium for the basic level work, work that will likely be delegated to a bookkeeper in the firm, all the while paying the fees of the professional that they occasionally speak with. This is a very similar situation with the legal profession where you always talk to the lawyer but if it your needs are simple and routine such as a will or real estate transaction, most if not all of the work is performed by a paralegal.

A word of caution is relevant when choosing a bookkeeper as most bookkeepers are not part of a professional organization and have had no professional certification. As previously stated, bookkeeping crosses a huge spectrum from simple data entry all the way to tax advisory services, so make sure you know what you are paying for. While a bookkeeper may have years of experience, they may have had no formal education in the field. This is however changing rapidly in Canada, with the likes of the Institute of Professional Bookkeepers of Canada, The Canadian Institute of Bookkeeping and the Canadian Bookkeepers Association all offering professional certification, courses and ongoing professional development. Many of the members of these organization not only have skills honed over years of public practice experience but their skills are also backed up by education and exams.