Bookkeeper Versus Accountant: What Does Your Business Need?

 In Business, Education, Tax Blog

Crunching numbers is not always everyone’s cup of tea— which often means that smart business decisions start with hiring the right people who know how to pour the kettle flawlessly. No spill, no mess— and all is accounted for.

But who are these number crunchers? Who does your business need to keep its cash flow management up to par?

What Does a Bookkeeper Do?

It’s only too often that the term “bookkeeper” is used interchangeably with “accountant”; however, the two are nothing short of different.

While an accountant can be coined as the big picture hire, a bookkeeper is here for the day-to-day data management, keeping transactions up to date for the present. The work of a bookkeeper is configured to continuous financial tasks involving expenses, income, payroll, invoicing, retained earnings— all fiscal items that go into government audits.

You want a bookkeeper to maintain the data and ensure it’s up-to-date, recording the data efficiently.

Essentially, bookkeeping sets the stage for accounting.

What Does an Accountant Do?

An accountant applies the bookkeeping to the bigger picture of a company, looking into the data and seeing what exactly is going well… and what can use some work.

A business account ultimately analyzes your business’s operations based on the numbers so they can calculate performance metrics, costs of operation, cash flow analysis, and overall trends reports to see where the budget can be cut, or bolstered.

For a business to make the proper financial decisions, it needs to grow and make a profit; it needs an accountant to financially forecast, to advise, and to guide.

The Net-Net

While bookkeepers record the financial data and keep a company’s financial numbers accurate day to day, accountants apply those numbers to see the bigger scope of how financially sound the business is running. They advise the company on how to move forward based on what they see.

How Do You Know When You Need a Bookkeeper?

If you’re struggling to decide which role your business needs today to move forward, ask yourself first and foremost if your finances, balance sheets, spreadsheets, and the like are all up to date.

Continue to probe with the following questions:

  • Can you accurately see and understand the cash flow of your business?
  • Are your numbers all ready to go for tax season?
  • Do you have monthly financial statements that you can take a look at?
  • Have you missed tax write-offs?
  • Do you feel like you’re missing something— are your sales increasing but your profits aren’t or vice versa?
  • Do you feel your finances are getting complicated?

If you answered yes to any of these questions, you just might need a bookkeeper to get your business affairs in order.

How Do You Know When You Need an Accountant?

Maybe you already have a bookkeeper— or maybe you have been diligently keeping up with the data yourself and feel confident all is accurate.

And maybe, instead, you feel as though you need to know more, and you want to know how to start changing the numbers you see but have no clue how to begin.

Are you asking these questions below?

  • Is your company rapidly growing or quite the contrary and you feel like you can’t keep up?
  • Are you being audited and you feel stressed for the outcome?
  • Do you want to begin moving money around or take more risks with the business?
  • Do you feel uncertain of how to balance your expenses and revenue?
  • Do you have various forms to file for your employees?
  • Are you unsure how much tax you have due and how to pay?

Answering yes to any of the questions above is enough qualification and validation for your business to hire an accountant.

What’s Best for Your Business

And when it really comes down to it, it’s best for your business to have both roles playing a major part in your company’s success.

After all, the numbers and the health of the business go hand in hand, much like bookkeeping and accounting— and there is no separating the importance of the two.  If you would like to discuss your bookkeeping and accounting options, Jeanine Hemingway, CPA is here to help.  We welcome the discussion to ensure your company is financially fit.

Recent Posts

Start typing and press Enter to search

4 ways an accountant can help you beyond tax seasonTop Tax Planning Ideas for 2021