As a startup business grows into a small business, it is common for the accounting duties to overwhelm the business owner. This is generally the time that a search begins for some help, but does your business need a bookkeeper or an accountant?
A bookkeeper generally handles the day to day functions of maintaining accounting records for the business. This process usually consists of entering transactions into journals and preparing reports. Basically, it is the recording of data about your business so that accurate financial statements and accounts can be prepared monthly. A bookkeeper can spend considerable time with your business, often working at your premises and may also provide other useful business related services such as general administration and credit control and chasing payments.
Accountants are less involved in the day to day tasks of entering transactions but take a higher level look at the business. The accounting process involves interpreting financial information, often provided by the bookkeeper, in order to prepare reports that are useful in helping managers make informed decisions about the business. An accountant presents financial statements to help with decision making and to comply with the law, and typically include income statements and balance sheets. It will generally be your accountant that completes the year-end accounts and other formalities, with the information provided by your bookkeeper. Your accountant will be able to advise you on tax efficiency and company structure and should be your first point of reference when proposing to make ownership changes.
Since accountants generally charge more for their time, most small businesses can’t afford to add on an accountant to do the everyday work of a bookkeeper. A good approach is to hire both; hire a bookkeeper for day to day tasks, and then outsource the accounting work to an accounting firm or registered accountant. For cost saving, it is important to make sure your bookkeeper and accountant communicate and get on with each other.
The key is to make sure you use the right person for the job–both bookkeeper and accountant should be qualified, insured and ideally regulated by a professional body so that you know your business is in reliable hands.