There’s much more to running a business than just coming up with ideas and putting them into action. There is also the financial side of things, including bookkeeping and accounting. Many businesses rely on a professional bookkeeper or accountant to handle their finances, but what exactly does an accountant and bookkeeper do? What’s the difference between the two? And most importantly, which one does your business need?
What Does a Bookkeeper Do?
A bookkeeper is responsible for keeping track of the money that comes in and goes out of a business. This includes recording all financial transactions and ensuring accurate and up-to-date records. Their core duties may consist of:
- Data entry
- Bank reconciliations
- Accounts receivables such as preparing invoices and following up on payments
- Accountants payable – ensuring timely payments to vendors and suppliers
- Payroll, including accurate payment and calculation of deductions
Some bookkeepers may also assist in preparing financial reports such as profit and loss statements or balance sheets and prepare BAS (business activity statement). However, bookkeepers who wish to undertake tax work, including BAS services, may be required to be registered.
What Does an Accountant Do?
An accountant provides analysis and interpretation of financial data. An accountant’s role can vary depending on the size and nature of the business. Some duties may include:
- Preparing, examining, and verifying financial statements such as balance sheets and income statements
- Auditing financial records to ensure accuracy and compliance with laws and regulations
- Evaluate financial operations, and recommend improvements
- Develop long-term business plans based on financial data
- manage budgets, and develop forecasts
- Tax planning and preparation of tax returns
- Cash flow management
- Risk analysis
- Advising on financial matters such as investments, insurance, and loans
- Advise on strategies to reduce costs and maximise profits
Certified public accountants (CPAs) have additional responsibilities, including meeting minimum experience requirements and engaging in continuing professional education.
Accountant vs Bookkeeper
There are some similarities between accountants and bookkeepers, with some responsibilities overlapping. Accountants and bookkeepers need to be excellent with numbers, have an eye for detail and have strong analytical skills. They must also be able to use financial software programs and stay up to date with changes in financial regulations. The main difference between bookkeeping and accounting is that bookkeeping is focused on the day-to-day financial transactions of a business. In contrast, accounting takes a bigger picture and broader view. An accountant will have bookkeeping and other financial analysis and management skills. An accountant will typically need to be degree qualified, while a bookkeeper may not need a formal qualification, although some businesses will prefer to hire a bookkeeper with formal qualifications. Accountants and bookkeepers often work closely to provide business owners with accurate financial information.
Does Your Business Need a Bookkeeper or an Accountant?
As you can see, there are distinct differences between bookkeepers and accountants. So, which one do you need?
The simple answer is that bookkeeping and accounting are essential for a successful business. Bookkeeping provides the financial foundation that accounting builds upon. Together, they give you a complete picture of your business finances which is invaluable information when making sound financial decisions for your business.
Outsourcing to a Professional Bookkeeper and Accountant
Many business owners prefer to outsource their bookkeeping and accounting needs to professionals. A professional bookkeeper or accountant can also offer valuable insights and advice that can help you improve your business. This frees up your time to focus on other aspects of running the business- and it gives peace of mind knowing that your finances are in good hands. There are also significant cost savings by outsourcing your bookkeeping and accounting; you only pay for the services you need when you need them- rather than paying for full-time staff and associated costs such as office space, equipment, and software.
If you are thinking about outsourcing your bookkeeping and accounting needs, get in touch with us today. We would be happy to chat with you about your specific needs and how we can help.