When it comes to the financial health of your business, finding the right type of professional help is crucial for long-term success. And if you’ve done any research on the topic, you’ll know that bookkeepers and accountants are the most common financial experts to help you out.
TL;DR: Bookkeepers and accountants have very different roles in your business! Even though they both deal with the financial side of your business, their goals, scope, and expertise are unique.
Today, we’re here to clear up some of the confusion and explain what a bookkeeper does, what an accountant does, and why you need both for your business.
What A Bookkeeper Does
The main role of a bookkeeper is to organize the financial data of a business. More specifically, they’ll keep track of transactions and any money coming in or going out of your business. A bookkeeper keeps track of your money and records all the details of day-to-day accounts so you can maintain consistent financial records. A bookkeeper will take care of payroll, invoicing, receipts and bills, and generally keeps an eye on finances to make sure everything is accurate and your accounts are reconciled.
Depending on the size of your business, you may decide to do bookkeeping yourself, or you may outsource to a bookkeeper when you need help. If you have more complicated transactions occurring in your business, you might want to consider hiring a bookkeeper quarterly or monthly to keep your finances organized and up-to-date. If you have a larger business with strong revenue and many employees, you may even want to hire an in-house or contractor bookkeeper who can support your business daily. That way, you’ll be able to stay on top of your business finances and avoid quarterly stress when it’s time to file estimated taxes.
What An Accountant Does
Although an accountant also works with your finances, their role is to create, examine, and evaluate financial reports to give you detailed information about the fiscal wellbeing of your company. They’ll prepare adjusting entries to account for money that hasn’t yet hit your books, or hasn’t yet left your account.
Accountants act as a consultant on financial matters, and use their knowledge and training to give you advice based on their analysis. They can help you develop a budget to realistically hit your financial goals. Accountants are also the ones who will conduct audits for your business to make sure your business is financially stable.
One of the most important things accountants can help you with is tax planning and filing. They will be able to help you navigate tax rules and specifications for your business. If you have limited experience with preparing and filing your taxes, or if your business finances are more complicated than you want to deal with, it’s worth hiring an accountant to help you get through tax season.
Which Do You Need?
Bookkeepers and accountants are BOTH useful for your business, and while their roles sometimes overlap, it’s important to know when you should hire one versus the other.
Both bookkeepers and accountants will help you stay on top of your finances–a bookkeeper will help you stay organized with daily bills and invoices, while an accountant can give you financial forecasts so that you’re able to make informed decisions for your business. The catch here is that in order to have accurate data, you need to have detailed and precise bookkeeping first!
In general, you should hire a bookkeeper to help you keep up with finances that occur year round. They’ll help you manage those day-to-day accounts and transactions that otherwise bog you down and make it impossible to do the rest of your job. When tax season comes around, your books will be neat and tidy thanks to regular upkeep. At that point, you can hire an accountant to help you officially file your taxes. It’s also a good idea to hire an accountant whenever you’re making a big financial decision, like considering which direction to take your business, what to expand or invest in, or how to budget for future growth.
If you’re looking for a bookkeeper to help you keep your finances organized, you have our full support! We offer monthly bookkeeping services and a QuickBooks clean up in case your accounts need some TLC. Send us a message and let’s chat!
