As every business grows, its revenue increases. Therefore, things can get complicated. Professional help often is needed at this point to manage the business successfully.
Most successful small businesses have experts who are consistently in charge of ledgers. This role could be filled by a bookkeeper or an accountant.
However, most people mistakenly think a bookkeeper is synonymous with an accountant. Well, they are not correct!
Bookkeeping and accounting are two different professions. Hiring either of the two will impact a business differently since they both play different roles in a business.
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What does a bookkeeper do?
Just like the term sounds, a bookkeeper is in charge of keeping books. Basically, bookkeepers focus entirely on the transactional state of a business.
A bookkeeper will do the following for a business:
- Record daily sales
- Document the expenses
- Process the payments
- Manage payroll
- Balance financial books at the end of every month
Bookkeepers are also responsible for keeping records of both a business’ accounts receivable and payable. Sometimes they also handle petty cash and create basic financial statements for a business.
What does an accountant do?
An accountant is qualified to undertake all the roles of a bookkeeper. However, the accountants look into a business with a broader perspective.
An accountant is more like a business’ financial supervisor. Using financial documents provided by bookkeepers, accountants think strategically to determine the financial health of a business.
An accountant will do the following for a business:
- Give tax advice and plans
- Assist in the business establishment
- Audit
- Corporate compliance and reporting
- Advise on financial management
- Advise on superannuation funds
How can you choose between hiring a bookkeeper or an accountant?
A business owner should know the credentials of each professional to make the right choice of who the business needs at what time.
A business will need both an accountant and a bookkeeper at various stages of the financial cycle.
Financial transactions and administrative responsibilities are things that will need to be done now and then in business. Therefore, a business should have at least a bookkeeper to carry out these tasks.
At least every end of a month, a business owner should be interested to know how the business is performing. It is OK for businesses not to have full-time accountants.
Accountants can be hired at the end of every financial month to give an insight using documents provided by the bookkeepers.
For financial accuracy, businesses can hire accountants now and then to audit the work done by bookkeepers. The accountants will review the work and advice the bookkeepers when necessary.
Alternatively, the two services can be combined to manage a small business successfully. An accountant can be hired to perform both the roles of a bookkeeper and those of an accountant, which can be a cheaper option.