What is the Difference between Accountants and Bookkeepers?

When most people think about accountants and bookkeepers, they would be hard-pressed to describe the different roles that each plays. In this article, the differences between accountants and bookkeepers are explained, and examples are given that illustrate why business owners need to know and use the difference. The confusion between accountants and bookkeepers is understandable. After all both share a similar goal of ensuring financial records are in order and at times accountants collect and organize financial data in much the same way a bookkeeper would.  While they may have similar objectives, bookkeepers are generally more focused on recording and organizing of transactions whereas accountants often use the financial information about a company to prepare and interpret key financial documentation. In addition, the level of education and training required as an accountant is much more rigorous and extensive than it is for a bookkeeper.

Several Degrees of Separation

For business owners, it’s important to understand the kind of credentials accountants and bookkeepers have in order to determine how or when to use each.

There are several  degrees of separation by education the degrees of education, flexibility  of approach and standards. To qualify for the title of accountant, generally an individual must have a bachelor’s degree in accounting. For those that don’t have a specific degree in accounting, finance degrees are often considered an adequate substitute.  Alternatively significant financial experience could be a suitable qualification for roles such as an Accounting Specialist/Technician or Analyst. Accountants, unlike bookkeepers, are also eligible to acquire additional professional certifications. For example, accountants with sufficient experience and education can obtain the title of Certified Public Accountant (CPA), one of the most common types of accounting designations. To become a designated professional, an accountant must pass the Uniform Certified Public Accountant exam and possess experience as a professional accountant. A significant portion of this experience is obtained through articling with more senior accountants.

How Professional Accountants Help Businesses

While audits sound scary, with properly kept books and financial records, an audit can be straightforward and even help a business determine how well they are meeting their financial goals. CPAs not related to the company should be the ones who perform external audits – a process that entails looking at all financial records and determining their compliance in relation to Generally Accepted Accounting Principles (GAAP). An audit also ensures that the books fairly represent the financial position of the condominium board and meet all the requirements outlined in the Ontario Condominium Act.

The Job Titles for Accounting

Various Roles in the Enterprise

Beyond the specialized functions required in an audit, accountants can occupy diverse roles within a business. For example, listed below are some of the most common functions of accountants as well as requirements for each title.

An accounts receivable (A/R) clerk is responsible for identifying who owes the company/condominium money, sending out invoices and posting payments, as well as updating the receivable account by totaling unpaid invoices, and being in charge of maintaining the receivables account. Typically, they are required to have between zero and three years of experience with a high school degree. Accounts receivable clerks are great entry level accountant job.
A payroll clerk is responsible for maintaining payroll information through collections and recording data. Payroll clerks also handle all payroll discrepancies. Payroll clerks are a great way to gain experience in the accounting field.
A payroll clerk is responsible for maintaining payroll information through collections and recording data. Payroll clerks also handle all payroll discrepancies. Payroll clerks are a great way to gain experience in the accounting field.
A bookkeeper records all financial transactions. Bookkeepers maintain and balance subsidiary, general ledger, and historical accounts. Typically, bookkeepers are required to have between two to four years of experience or an associate’s degree. Many experienced bookkeepers embody some of the accountants’ roles providing analysis and advice that goes beyond standards debits and credits. Some accountants during their training period may work as bookkeepers and many bookkeepers increase their training further to move towards the sphere of a professional accountant.

The Condominium Environment

In a condominium environment usually the property manager’s office is small and it is unlikely that any more than an accounting clerk would be in the manager’s office. Corporate accounting, as defined further below would be more likely in the corporate offices of the property management company. Condominium Boards are run as a not-for-profit corporation with many restrictions including preserving the segregation of the reserve fund and ensuring that every condominium owner or resident pays their common expenses every month so that the condominium corporation can continue to operate.

The Ontario Condominium Act requires that at least 10% of the monthly fees collected go into the reserve account to ensure that there is adequate funding for major repairs as the need arises. The requirements of the reserve fund are recalculated every three years to ensure that the funds are sufficient for the foreseeable future. These funds can be used to replace the carpet, repair the roof or other similar capital expenditures. Usually the monthly fees are calculated based on the percentage
of the total individual areas a specific unit occupies. In this manner, a 3 bedroom condominium would pay close to three times what a bachelor unit would pay, depending on a number of other factors, but mostly based on the gross square footage owned by the payer. Monthly common fee rates can only be adjusted by a quorum of the condominium board through a proper vote. Minutes of these meetings are then distributed and common fee payers notified.

In a condominium environment, to ensure regular cash flow, most common fees are paid by PAP (Pre-Authorized Payment) as a monthly deduction from the payers’ bank account. So if an accounts receivable arises, it must be dealt with promptly as lien positions must be registered within 90 days.

Accountants vs. Bookkeepers

The Bottom Line

One very crucial part of business is money. How it is handled, tracked, spent, saved and earned has major consequences as to whether that business will thrive or stumble. The key to financial success rests on having organized financial records. At the outset of their business record keeping adventures, many entrepreneurs open up an Excel spreadsheet and begin keeping track of their expenses that way. Whether they know it or not, keeping the financial transactions in order is exactly the role a bookkeeper plays.

Of course organized records are just the first step. In order to properly balance and understand their finances, the entrepreneur needs to be able to take their financial data and interpret where the deficiencies are. While not impossible to do on their own, this is generally where an accountant (and all of their education and training in accounting and analyses) comes in handy. The more organized the financial records are, the more efficient the accountant can work  when analyzing the business’ numbers.

The company offices of the property management company require a full range of accounting and analytical skills ranging from controllers, internal auditors, tax accountants all the way to chief financial officers who ensure the long=term profitability and tax advantages of the property management firm. Many authors recommend hiring an accounting pro to keep finances in order for a small business. The good news for many small businesses is that there are many services available to help. For example Condo Services Agency condoservicesagency.com has the specialized expertise and knowledge of condominiums and private businesses to provide both
the not for profit reporting requirements of condominium boards and the  taxable profit driven reporting requirements of property management companies.

The professional accountants at Condo Services Agency provide the necessary analysis and audit trail to make both the condominium board’s tasks and the external auditor’s task that much easier and hopefully less expensive.

In addition, the analysis also highlights potential weaknesses in control and financial forecasts that may foreshadow future difficulties if left unchecked. Condo Services Agency prides itself on many years’ experience in the industry as well as a thorough understanding of the intricacies of condominium industry allowing them to provide the best possible service to their clients.
Another nice feature of Condo Services Agency is their professional integrity in that they will review your current system currently in place. If they feel they cannot operate more efficiently and more economically, they will tell you and not waste your time.

Call 1-855-591-4589 today for an improved bottom line tomorrow.