Professional advice: accounting vs. Bookkeeping

The distinctions between accounting and bookkeeping are subtle but important to understand when considering a career in either field. Accountants record the daily financial transactions of a business. Accountants, by contrast, focus more on the big picture.

Key takeaways

  • Although they are job titles that are used interchangeably, bookkeepers and accountants are different with different requirements.
  • Accounting is where accountants generally start their careers, as the barriers to entry are lower and the pay is decent.
  • Accountants, although not formally required to do so, traditionally acquire their CPA certification as well as their master’s degrees.
  • Bookkeepers can be thought of as those who line up all the small pieces in places where accountants see and organize those pieces.

Accountant vs. Accountant

With accountants, there are many minutiae involved, and attention to detail is paramount. Meanwhile, accountants tend to use the input of the accountant to create financial statements and periodically review and analyze the financial information recorded by accountants. They conduct audits and forecast future business needs.

The two careers are similar, and accountants and bookkeepers often work side by side. These careers require many of the same skills and attributes. However, there are important differences such as the work done in each career and what it takes to be successful. The following analysis compares education requirements, necessary skills, typical starting salaries, and accounting and bookkeeping job prospects.

Required education

Neither accounting nor bookkeeping impose fast and strict educational requirements. You can find many accountants and even some accountants who have no education other than a high school diploma. Unlike careers like law and medicine, where state licensing boards determine how much education you need, with accounting and bookkeeping, the companies they hire decide what to require of candidates.

That said, landing an accounting job requires, in most cases, more education than becoming an accountant. In the 21st century, most accountants have bachelor’s degrees. Many have advanced degrees, such as MBAs with a concentration in accounting or finance, or have Master’s degrees in Accounting. To take the Certified Public Accountant (CPA) exam, which is a common goal of many accountants, you must have a minimum of 150 hours of post-secondary education. This is a bachelor’s degree plus 30 hours of graduate work; Most CPA candidates go ahead and complete their master’s degree.

You can become an accountant right after high school by showing that you are good with numbers and that you pay close attention to detail. In fact, many aspiring accountants work as accountants to get a foot in the door while they are still in school. Additionally, accountants who excel at their jobs are sometimes promoted to accounting positions, even if they lack the level of education that the company normally prefers.

Skills needed

Accountants and bookkeepers work with numbers all day. Therefore, those who do not like mathematics, are easily confused when doing simple calculations, or are generally averse to number processing should not apply.

Speaking of numerical computation, that job duty is actually more common in bookkeeping than in accounting. Companies entrust accountants with tasks such as recording journal entries and performing bank reconciliations. As an accountant, your attention to detail must be almost supernatural. Careless mistakes that seem inconsequential at the time can lead to bigger, more costly, and more time-consuming problems down the road. Must be able to multitask. Rarely does an accountant work on a large project during an eight-hour shift; Rather, a typical workday involves juggling five or six smaller jobs.

As an accountant, you also have to do calculations, but it is much more important to possess sharp logic skills and general problem solving skills. While accountants make sure the small pieces fit properly into place, accountants use those small pieces to draw much larger and broader conclusions.

Starting salaries

Both majors, accounting in particular, cover a wide range of starting salaries. How much you make as a first-year accountant depends in large part on the specific career you pursue. While accounting can be a lucrative career in the long run, most accountants, unlike corporate lawyers or investment bankers, do not charge large salaries for the first few years.

Public accounting generally pays a candidate fresh out of school more. In particular, the big four Ernst & Young firms, Deloitte, KPMG, and PricewaterhouseCoopers offer higher salaries than medium and small firms. Depending on the city, you can expect to earn between $ 40,000 and $ 60,000 in your first year as a Big Four accountant.

Small and medium-sized public accounting firms pay, on average, about 10% less than the Big Four. If you choose to work for a company internally instead of doing public accounting, the starting salary range is very wide. In most cases, private companies pay no more than the Big Four for young accountants with little experience.

Bookkeepers often receive hourly wages rather than annual wages. The average salary for someone new to the business is $ 20 per hour. This is the equivalent of about $ 40,000 per year, assuming a 40-hour workweek. The advantage of hourly pay is that you receive 1.5 times your normal salary for hours worked more than 40 per week. In accounting, overtime is common during peak season from January to April.

Labor outlook

The growth of accountants and auditors is expected to continue over the next several years. The Bureau of Labor Statistics segment will increase jobs by 4% from 2019 to 2029. However, bookkeeping and bookkeeping jobs are expected to decline, and the BLS projects a 6% drop in jobs. of work during the same period.

The BLS notes that job growth for accountants should track fairly closely with the broader economy. However, accountants will face pressure from automation and technology that will reduce the demand for these workers.

Which to choose?

For a long-term career, accounting offers much more upward mobility and income potential. The education required to be competitive in the field is greater, but the payoff in the future can be considerably greater. That said, accounting is a great starting point if you are interested in the field but not fully engaged and want to test the waters.

You may also be an ideal candidate in accounting if you want a good job with a respectable salary and decent security, but you may not be looking for a long-term career. Accounting offers much lower barriers to entry and the competition you face when looking for a job is less fierce.

READ ALSO:  Definition of retrospectively qualified insurance
About the author

Mark Holland

Leave a comment: