Understanding what you’re getting when hiring an accounting firm vs. a bookkeeper.
Have you hired an accounting firm for your business? What about a bookkeeper? When it comes to managing the finances of your business it’s important to know the difference because accountants and bookkeepers can offer some of the same, and some very different services. In order to make an informed decision, it can help to have all of the information of what each does and how they can help your business. Here’s a breakdown of the similarities and differences between the two.
What Does an Accountant Do?
An accountant is often the financial backbone of a business, but they do more than just number crunching. They are responsible for the financial management of a company, no matter how small or large, or what industry the business is a part of including manufacturing, retail, food service, restaurants and bars, financial institutions, home services, and even government agencies. They can also play a primary role in the selection and management of an accounting system, including software installation and implementation.
- Prepare financial statements and reports
- Maintain a general ledger
- Analyze the cost of operations
- Oversee payroll
- Advise on investments
- Oversee and ensure accuracy of all financial information
- Tax preparation and filing
- Advice in financial planning
What Does a Bookkeeper Do?
A bookkeeper is someone who keeps the books. They are responsible for all of the financial data keeping and recording for a company. This can include:
- Enter all financial transactions including accounts payable and accounts receivable
- Manage petty cash for an office or business
- Monitor payroll and verify accuracy
- Handle bank deposits and wire transfers
- Preparation of monthly and quarterly taxes
- Prepare financial reports
How Do I Know Which One Is Best For My Business?
In many cases, a bookkeeper can handle much of the accounting responsibilities of a small business. The industry you’re in and the scope of your finances will help determine whether or not a bookkeeper is the right person for the job or if you need more comprehensive financial expertise such as that provided by an accountant.
Sometimes, however, what your business really needs is a bookkeeper. If you need someone who can manage your financial record keeping with minimal involvement in the decision making, a bookkeeper might be just what’s needed.
Does My Company Need Both a Bookkeeper and an Accountant?
There are tasks that belong specifically to a bookkeeper and there are those that belong distinctly to an accountant. The roles are not interchangeable. Where the bookkeeper is tasked with the daily upkeep of the financial records, the accountant is charged with making sense of that information.
Analyzing the operations of a business and understanding the profit and loss aspect in order to give guidance and advice on investments and expenditures is an important function of an accountant that falls outside the scope of a bookkeeper’s role. However, without the bookkeeper to keep up with and manage all of the data, the accountant would have to do all of that data gathering themselves. In essence, each role supports the other in many situations.
What’s important when deciding between a bookkeeper and an accountant is to really look at the immediate needs of your business. Even if what you need today is a bookkeeper, as you business grows you could also find yourself needing the expertise of an accountant.
No matter what type of business you own, you need to be sure your financial information is kept accurately. And no matter whether you decide to hire a bookkeeper or an accountant or both, the key to successful financial recording is to find a company that you can trust to be accurate and efficient. Call 888-743-3080 for a free consultation to learn how an accounting firm can help your business.