A misconception exists that bookkeeping and accounting are one and the same. While they both work to assist you with your finances, there are some important distinctions between the tasks of a bookkeeper and an accountant. From the outset, it is important to understand that both bookkeepers and accountants forms an integral parts of your business. While their tasks can sometimes overlap, there are definitely certain aspects of your business that you would specifically entrust to an accountant, and others to your bookkeeper.
In layman’s terms, a bookkeeper will likely be the person that assists you with the ongoing financial day-to-day transactions that keep your business running smoothly. Your accountant, on the other hand, will be the person who analyses the data compiled by your bookkeeper, reports on it. Your accountant should have a strong understanding of your taxation requirements.
In order to understand the concept in the benefits that both bookkeepers and accountants can offer to you, from a financial perspective, it can help you making a clear decision to choose between them.
Believe it or not bookkeepers are instrumental in the ongoing day-to-day financial operations of your business.
Some of the key functions that are regularly undertaken by your bookkeeper includes:
- Processing invoices, receipts, payments
- Processing and maintaining your payroll system
- Preparing initial financial statements
- Reconciling accounts and preparing reconciliation reports
- Managing your accounts receivable and accounts payable
- Calculating GST (VAT returns)
- Updating, establishing and reviewing accounting systems
There are a wide variety of other tasks that a bookkeeper can undertake, and much like the tasks outlined above, they are generally related to the ongoing maintenance of your financial records.
It is important to be aware that there is likely to be a substantial difference in fees charged by bookkeepers and accountants. In order to best utilize your budget, extensive consideration into which tasks are to be delegated to a bookkeeper or an accountant is strongly advised.
The role of an accountant in your business is often more advisory and analytical in nature. An accountant will be in a position, through analysis of past performance, offer financial projections and predict and advice on future financial performance of your business.
Further services, but not limited, offered by your accountant can also include:
- Company registrations
- Corporate reporting and compliance
- Financial management advice
While the list of an accountant’s services is not only limited to analytical and advisory in nature but can be extended towards many other aspects of your financial needs, it all depends on the level of knowledge and size of the business you’re dealing with.
It can therefore be argued that there are substantial differences between the services offered by bookkeepers and accountants, however, both are crucial to the growth and success of your business. Instead of boxing them in a ‘bookkeepers vs accountants’, it is important to note that both must work together to accomplish success.