You’re at the point in your business that you know you need help with your business accounting. You need advice about record keeping, legal structure, funding, and how to minimise your tax liability.
Your insurance broker tells you that you need a bookkeeper to help you get organised, but your banker is telling you to hire an accountant. Bookkeeper vs. accountant, you’re hearing some differing opinions.
Choosing the right accounting professional will be one of the most important decisions that you make for your business, but how do you decide between a bookkeeper and an accountant, and when should you start looking?
Bookkeepers vs Accountants: What Bookkeepers Do
Let’s focus on bookkeepers.
Bookkeepers typically “keep the books”, hence the name. They set up the accounting procedures and maintain the records for a company, usually using some form of software. The purpose of a bookkeeper is to organise financial information in such a way that it can be used by business owners, managers and accountants.
Bookkeepers understand the day-to-day financial operations of the company and typically dig into the details. Skilled bookkeepers should have at least 2 to 4 years of experience or an associate degree in accounting.
Tasks usually performed by a bookkeeper include:
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Recording invoices and payments from customers
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Recording cash expenses and paying vendor bills
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Managing the payroll
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Maintaining and reconciling bank and other accounts
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Advising clients on recordkeeping requirements and methods
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Ash flow forecasting and management
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General recordkeeping
Bookkeepers vs Accountants: What Accountants Do
Accountants analyse the financial information that bookkeepers prepare. They advise their clients on a variety of financial issues, and they complete financial reports and tax forms.
While some accountants provide bookkeeping services, they are also skilled in preparing the financial statements and reports that are required by banks and governmental agencies.
Tasks usually performed by an accountant include:
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Verifying the accuracy and completeness of the accounting records
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Preparing financial statements
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Preparing tax returns
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Income tax planning
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Advice on tax law, entity structure, and key financial decisions
What Bookkeepers and Accountants Both Do
It isn’t always bookkeepers vs accountants: there is some overlap.
Both bookkeepers and accountants provide strategic advice to their clients. A bookkeeper might tell you how to streamline your accounting processes or help you create a budget for your business while an accountant could suggest ways to minimise your tax liability or help you decide whether to incorporate your business.
Now that you have this information, you are able to make a much more informed decision. Sometimes there are no need to have either and sometimes you need both. All of this depends on your business’s situation and the amount of money and spare time that you have.
There are affordable bookkeeping solutions available and they are not hard to come by. Make the decision today and hire a bookkeeper or accountant if this is the way that you need to go to help develop your business further.
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— Will Corry (@slievemore) November 22, 2018