Founders – Bookkeeping vs. Accounting: What’s the Difference?

Apr 28, 2022


When it comes to differentiating bookkeepers from accountants, a lot of startup founders primarily focus on when to hire them. For example, you might hire a bookkeeper on an ongoing basis, but only work with an accountant during tax filing season.

The trick, though, is that your startup might need more or less than the commonly used model. It might benefit from meeting with an accountant quarterly to optimize your R&D tax credit, for example. All told, there’s no one-size-fits-all application of bookkeeping and accounting services. The right fit for your startup and its finances needs to be tailored to your startup and its current stage, whether you’re pre-seed, seed stage, Series A, or beyond.

Ultimately, that means that you want to be able to discern where your startup can truly benefit from accounting or bookkeeping services and where it would be better served by using software to automate it or handling things in-house.  

To help you make those distinctions, we built this quick overview of accounting, bookkeeping, and the difference between the two. 

Bookkeeping 101

As the name suggests, a bookkeeper’s primary responsibility is to keep up your company’s books. That means they meticulously track money coming in and going out, categorizing spend and revenue. 

A good bookkeeper will have strong attention to detail. They’ll be able to pick out errors and irregularities when going line-by-line through your account transactions. And they’ll have the ability to reconcile all of your accounts to make sure all of your startup’s money is accounted for. 

At the same time, your bookkeeper can likely handle some of the to-dos required for your startup’s financial operations. For example, they can generally prepare invoices or run payroll,  

A startup’s bookkeeper might handle all of these tasks:

  • Bank and credit card reconciliation 
  • Accounts receivable
  • Reconciling and recording prepaid expenses (e.g., software subscriptions) in the right period
  • Fixed asset reconciliation
  • Recording deferred revenue in the right period
  • Amortizing long-term assets and liabilities
  • Equity and Cap Table reconciliation
  • Stock option expense recording
  • Revenue reconciliation
  • Expense classification

Long story short, when you want someone to record and organize the details of your startup’s financial goings-on, you need a qualified bookkeeper. 

All this said, while the bookkeeper can make it easier for you to see trends and identify potential obstacles early, they won’t necessarily call out those things themselves. For that, you need an accountant.

Accounting 101

For a lot of finance professionals, bookkeeping is the first step in their career. After gaining experience as a bookkeeper, many go through the process to become Certified Public Accountants (CPAs).

Because they have more experience and expertise, accountants can use the data bookkeepers prepare to analyze your startup. They can provide you with the real-time information you need to make informed decisions, plus they can prepare the documentation you need to win over investors. 

While a bookkeeper prepares the financial report, for example, an accountant has the skills to assess it, identify key details, and use it to offer sound advice about your startup’s financial decisions. Accountants have experience in analyzing a company’s financial health and planning for an optimal future. If you want help with forecasting, your accountant can deliver.

As you probably already know, your accountant is also the one to prepare your tax filings. You can sit down with an accountant once a year to solely handle your taxes, but meeting with one more regularly can make tax preparation easier and help you make choices throughout the year for tax savings. 

In the startup world, you probably want to find an accountant who has experience in helping startups save on taxes, applies generally accepted accounting principles (GAAP), and understands what it takes to secure rounds of funding.  

The main differences between bookkeeping and accounting

To a large extent, the scope of focus delineates accountants and bookkeepers. 

Bookkeepers need to maintain a very granular level of focus, fixating on the daily activities of your startup. 

Accountants, on the other hand, zoom out. They look at the big picture of your startup, factoring in forecasting to visualize not just where you are now, but where you’re headed. 

What does your startup need?

All companies need both bookkeeping and accounting. You need to record and reconcile your company’s finances, and you need to file taxes. 

You could conceivably do all of this without hiring anyone, though. Bookkeeping software like QuickBooks Online can automatically track your cash inflow and outflow, invoices, and more. It can also make it easy to categorize transactions or reconcile accounts in a few clicks.

That all assumes that your startup isn’t doing anything too out of the ordinary, though. If you’re dealing with anything like a Capitalization Table or deferred revenue, you might need a closer eye on things than an automated solution can deliver. At that point, hiring someone to do your bookkeeping, can help you avoid costly mistakes and save work hours trying to get accounts to reconcile, plus it can help with scaling. With our pre-seed accounting package, for example, you’ll get the bookkeeping your startup needs from a staff of qualified accountants. That means that when your business is ready to level up, you won’t have to search for a new accountant.  They might even pay for themselves. At the very least, it’s worth talking to a couple of bookkeepers with expertise in the startup world to see what services they offer and how much they would cost. 

As with bookkeeping, you could potentially handle your accounting needs yourself. But expect it to be complicated. Very, very few startups have taxes simple enough to be handled by, say, a TurboTax-type solution. You’ll almost definitely need to sit down with an accountant to get your federal taxes filed, and the same is nearly always true for state and local taxes (SALT).  

At that point, it becomes a question of whether you should find an accountant you can sit down with annually during tax season or find someone to be more involved. If you want someone to review and analyze your startup’s financial information, forecast your future business needs, or develop reports for your board or investors, consider hiring an accountant for your startup. Our team at ShayCPA has the expertise to help you here.  


Some startups need a regular bookkeeper and a once-a-year accountant, some need both bookkeeping and accounting services, and some can handle things with their internal team and software. Ultimately, it varies from startup to startup — and hinges largely on the company’s current growth phase. 

If you want help analyzing what might be right for your tech company, talk to us. Our team at ShayCPA specializes in both accounting and bookkeeping for startups. We can help you line up the right services and tools — whether that’s QuickBooks Online implementation, a bookkeeper, an accountant, or some combination — to help your company succeed.