Many business owners don’t know the first thing about crunching numbers. Luckily there are people out there who do – like bookkeepers and accountants. A question you might be asking right now is: ‘Huh, aren’t they the same thing?’
The short answer is no, they’re not. They’re different and your business might need one or the other, or even both.
Let’s take a doctor and a nurse, for example. Both work in the medical field, yet their roles are not the same. The situation is similar to bookkeepers and accountants. Yes, they both with work with finances but in two very different ways.
As a business owner, it’s really important to know the difference between the two, because chances are, you’ll need either need a bookkeeper or an accountant on call (or both!). Let’s break it down…
Bookkeepers are the masters of keeping business financial records up to date, like receipts and invoices. They track all the transactions to and from the business, which include:
• Expenses and bills
• Generating and sending invoices
• Managing debits and credits
They take all the data from these transactions, capture it, summarise it, and make sure it’s organised so that future bills can be paid and reports can be pulled. This helps business owners know exactly where their cash flow is coming from and going to. Think of them as paper-trail ninjas.
Accountants carry a weightier role in that they are responsible for managing the company’s accounts; they also analyse financial data so that they can report on how the business is performing. This helps to forecast how the business could – and should – perform. Think of them as calculator fortune-tellers.
A good accountant should be able to:
• Prepare financial statements
• Complete and file tax returns
• Forecast any financial challenges and opportunities
• Analyse business operation costs
Because accountants need to know how every aspect of money works within a business, they have to complete at least a four-year degree. You wouldn’t let someone who claims to be a doctor operate on you if they weren’t qualified, neither should you let someone operate on your business without the proper qualifications.
Which one do you need?
Deciding whether you need a bookkeeper or an accountant will depend on how big your business is, what industry it’s in, and the level of expertise needed. A bookkeeper is less expensive and is ideal if you just need help in organising your daily transactions. However, if you need someone to take charge of the financials and be able to guide and advise you, getting the help of an accountant would be a very wise choice.
Whether you need help with bookkeeping, accounting, both, or anything in-between, Outsourced Finance can help you, wherever you're based.