Looking to hire a bookkeeper or an accountant for your business, but are not sure which will best suit your needs? We will go over the different tasks each professional is capable of performing to help you decide whether to hire a bookkeeper or accountant.
Key Facts:
- Bookkeepers are the record keepers and accountants are the analyzers and advice givers.
- While accountants can perform the tasks a bookkeeper typically does, a bookkeeper cannot perform most accounting tasks without the appropriate degrees and certifications.
- Depending on your financial needs you may need a bookkeeper or an accountant, or both.
In order to be successful in any business, you have to be aware of your financial situation. This means your financial records need to be up to date and accurate, so you are ready to make financial decisions at any time.
As your business becomes more successful and grows, your finances may become more complex and timelier to handle on your own. You may be ready to outsource the job and now it is time to decide if you need an accountant or a bookkeeper. While some people consider these two professions nearly identical, they have significant differences which should be taken into consideration.
A Bookkeeper’s Role
Bookkeeping is a process that has been used throughout history, all the way back to when it was done on slabs of clay. A bookkeeper keeps track of all the money going into and coming out of your business. Bookkeepers create the records needed for an accountant to do their job successfully.
Typically, a bookkeeper will record all the financial transactions, and their accompanying documentation if required, that take place every day and classify them as debits or credits. They will keep the records current and accurate, and ensure the accounts are balanced. They are also capable of creating invoices and overseeing payroll.
The main goal of a bookkeeper is to maintain the general ledger. The general ledger is the main accounting record for your business. A bookkeeper can use physical books to track the records for your business, but it is more common to utilize computer software.
An Accountant’s Role
Once the books have been completed for the period by the bookkeeper, the accountant then takes over. An accountant analyzes the data then uses it to make predictions and offer advice to the business owner.
Some common duties an accountant can tackle are:
- Confirm the accuracy of the data
- Examine the data
- Create reports
- Perform audits
- Give advice and projections based on the data
- Assist business owners with making financial decisions and explain the possible effects of those decisions.
The job of an accountant is to look at the big picture and help business owners understand the financial status of their company. An accountant should be able to help you understand what is going on with your finances and assist you in making the best decisions you can make for your company. Accountants are capable of doing the bookkeeping duties, and while you may think hiring just an accountant to do everything seems like a good idea, that is not usually the case. It will cost a lot more to pay an accountant to do the books than it would a bookkeeper.
Hiring a bookkeeper or an accountant, or both, is a decision that does not have to be daunting. Do your research, decide exactly what you want and if you change your mind, you can pivot and hire someone else or additional help.