A bookkeeper and an accountant are not the same thing. In fact, a bookkeeper is a lousy accountant and an accountant is a lousy bookkeeper. While each role is essential to your business, and you need one of each, it's important that you don't engage one person to be both.
A bookkeeper’s objective is to record transactions and keep you financially organised, while accountants provide consultation, analysis, and are qualified to advise on tax matters.
Bookkeeping is transactional and administrative, focused on keeping your "books" in order. A bookkeeper is more skilled on the accounting software and will work with you weekly if not daily.
Accounting is subjective to give your business financial insights and planning. A clean set of "books" maintained by a bookkeeper enables an accountant to give better and more accurate advice. Contact with an accountant is more likely to be quarterly if not annually.
Bookkeeping is the process of recording daily transactions in a consistent way, and is an essential component to growing a successful business.
What does a bookkeeper do?
- Bank Reconciliations
- Accounts Payable - paying your bills and managing your expenses
- Accounts Receivable - creating & collecting payment of your sales invoices
- Payroll - ensuring your staff are paid correctly and on time
- Balance - maintaining and balancing subsidiaries, general ledgers, and historical accounts
- Workflow - a bookkeeper will introduce you to efficient processes and procedures
- Technology - today's bookkeeper is competent with the latest cloud applications
- Back up - a bookkeeper is your "go to" person for guidance when it comes to managing the financial transactions of your business
Accounting is a high-level process that uses financial information compiled by a bookkeeper, and produces financial models using that information. The process of accounting is more subjective than bookkeeping. An accountant will steer you in the right direction and is updated with the latest tax regulations.
What does an accountant do?
- Preparing adjusting entries (recording expenses that have occurred but aren’t yet recorded in the bookkeeping process)
- Preparing company financial statements
- Analysing costs of operations
- Completing income tax returns
- Aiding the business owner in understanding the impact of financial decisions