What is the difference between a bookkeeper and an accountant?
Do you know the difference between an Accountant and a Bookkeeper or do they both mean the same thing to you?
When I asked this question most people tell me that bookkeeping and accountancy are the same thing. Actually they are very different!
While these financial roles share common goals, they support different stages of the accounting process. As a business owner, it is important to know the difference.
Bookkeeping is where your everyday income and expenditure is recorded on a regular basis by you or your appointed bookkeeper.
Where bookkeeping ends, accounting begins.
The work done by a bookkeeper and an accountant often overlap, as bookkeeping is a part of the accounting process. A bookkeeper records and classifies a company’s daily financial transactions such as sales, payroll, payment of bills, etc. The focus from a bookkeepers point of view is on accurate record keeping with less focus on the analytics.
An accountant builds on the information that is provided by the bookkeeper. They typically review financial statements prepared by a bookkeeper (since most bookkeepers do not have the degree of knowledge in relation to taxation for example). An accountant takes the next step and analyses, reviews, and interprets financial information for the company. They turn the records into reportable data that is used for decision making.
Which do you need?
It is important to understand whether you need to hire a bookkeeper or an accountant. This choice is primarily dependent on the industry and the level of expertise needed. A bookkeeper is less expensive and a great choice for daily transactions, while an accountant’s support and eyes on the books is great for periodic advice. Here are some questions to consider when making your decision:
What industry is your company in?
How large is your inventory?
How many employees do you have?
What services are you looking for?
What level of expertise do you need?
When should you seek financial support?
It’s never too early to engage a bookkeeper and an accountant professional. Business owners, that hire financial support in the early stages of their growth, rarely regret it as this helps them get started on the right track immediately. An accounting professional can help you create a plan; ultimately saving you time and money in the future. Having the support of a bookkeeper or accountant will free up your time, allowing you to focus on your business.
To discuss your bookkeeping needs, please get in touch to see how we can help you simplify your business and get you off on the right foot.