Most people would be hard-pressed to describe the difference between an accountant and a bookkeeper. 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.
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. Their focus 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 a four-year accounting degree). An accountant takes the next step and analyzes, 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 the company in?
- How large is their inventory?
- How many employees do they have?
- What services do they offer?
- What is their level of expertise?
When should you seek financial support?
It’s never too early to engage an accounting professional. Business owners, that hire financial support in the early stages of their growth, rarely regret it. 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.
Think your client, colleague or customer would find this valuable? Share it now…