I thought bookkeepers and accountants were the same?
Not a lot of people actually know what the difference between a bookkeeper and an accountant is. This creates confusion as to which one they should hire and do they need one (or both)?
Why you should consider hiring someone to help manage your accounting, to begin with. Small business owners (and bigger ones too) think they can just set up some sort of accounting software and that’s it.
BC Accounting advises to get an accounting software but it does not end there. It needs to be used on a regular basis. The information that is produced by the software needs to be used to run your business too.
Now if you are thinking, that’s great in theory but I have a business to run and cannot be focusing on the accounting system when I can be making money in my business. I don’t have the time to deal with all the extra behind the scenes administration. The extra time spent tracking and understanding your company’s records can easily pull your attention away from the areas of business that need you most. A financial professional, such as a bookkeeper or accountant, make sure that your business is earning money as efficiently as possible.
But, which one is right for you?
You may not need both immediately. If you are just starting out, you may be able to cope by “trial and error” but this will (should) not last very long because you will become too busy as explained above. The closer you get to capacity in your own work, this is when you need to think about getting someone to do it for you. This would be a professional who will do it correctly and far quicker than you would do. Accounting (and accounting software) can very easily become complicated and it’s important that you hire someone that is at least qualified in the field. IF you are going to outsource the function, ensure that the person (company) is qualified and it is their main source of income.
What does an accountant do for you?
An accountant will help analyze
- Your overall numbers such a positive or negative profit.
- Sales of your products and services
- Purchases and spending
- Payments to other businesses.
- Prepare financial records such as a profit and loss, cash flow statement, and balance sheet
- Predict business trends
- Forecast sales and help with unnecessary spending
- “big picture” aspects of a company’s finances
- Last but not least, tax.
It may not be necessary to hire a full-time employee until your business is running well. Chances are you don’t have enough work to keep a full-time accountant busy. It is a large step mainly for the cost involved. Outsourcing this function may be the best option. See the article regarding this here.
What does a bookkeeper do for you?
A bookkeeper will help record and organize
- The financial data that the accountant analyzes
- Day to day tracking of finances such as uploading receipts for you
- Reconcile your accounts (make sure things match up)
- Track profits and spending
- Works closely with the business owner to maintain complete records
As I mentioned before, accounting software makes it possible for a business owner to track their own records and report them back to their accountant. Hiring an outside bookkeeper can free up hours of time and keep your books accurate. Everything that bookkeepers collect from the owner are vital to the day to day operations of your business.
Bookkeepers and accountants are different and have different roles in your business. Basically, bookkeepers gather and organise the accounting data and make sure the numbers “all add up” and make sense. Accountants, on the other hand, take that data from the bookkeeper and analyse the data so you can make better decisions for your business.
Accountants are qualified and generally, bookkeepers are not. Accountants have a degree behind their name that enables them to take the data “one step further” than bookkeepers.
BC Accounting Services are qualified accountants and a member of South Institute of Business Accountants (SAIBA) as a Business Accountant in Practise as well as a member of the South African Institute of Tax as a tax technician.