Whether you just opened a small business or you own a large company, you might want to hire someone to take charge of your finances. Hiring an accountant or bookkeeper can be the difference between achieving your financial goals or making a critical error that’ll cost you. If you’re inexperienced in finance, a professional can take the burden for you so you can focus on expanding your business.
Before hiring an accountant or bookkeeper, you need to establish your objectives. Some of their duties overlap, but both serve different purposes. Below are the key differences so you can decide which is right for you.
Bookkeepers balance and maintain all financial accounts for their employer. They “keep the books,” meaning they continually update and maintain records of day-to-day and month-to-month transactions. Qualified bookkeepers have a keen eye for detail and can manage each detail of your finances. If you’re too busy to maintain the ledger yourself, don’t let the papers pile up. Hire a bookkeeper to manage your accounts, help you avoid penalties, and advise your decisions based on your past expenses.
- Maintain Accounts
Bookkeepers maintain a subsidiary ledger that contains all the details that support a general ledger. They log every detail day-by-day so you can refer to the ledger at any time.
- Balance Ledgers
The general ledger includes all financial information including accounts payable, accounts receivable, notes payable, and more. If you’re going through an audit, need to fix a mistake, or want to plan the future of your business, the general ledger is your go-to.
- Prepare Financial Reports
Qualified bookkeepers create reports that includes a summary of all past and present financial information. Financial reports contain income statements, current equity, statement of cash flow, and a balance sheet.
- Lend Financial Advice
Trust a qualified bookkeeper to give you professional advice based on your current financial status. You can expect them to examine financial trends in the company to guide your decisions and provide bookkeeping tips.
Accountants have a wider range of duties. Many of them have bachelor’s degrees or advanced certifications that permit them to perform a variety of tasks. While bookkeepers keep track of minute details, accountants are big picture thinkers that analyze data to help plan the growth of your business. You can expect qualified accountants to understand advanced financial concepts and have fine-tuned problem-solving skills.
- Financial Analysis
Expert accountants apply their problem-solving abilities to examine your finances and create projections for the future. They can find patterns and propose ideas you might not have thought of.
- Certified Public Accounting
Certified Public Accountants have advanced training that permits them to perform more tasks than non-certified accountants. CPAs can prepare three kinds of financial statements, including audited, compiled and reviewed. They’re also legally allowed to represent you before the IRS.
- Tax Preparation
An extensive knowledge of tax law is a must-have trait. They can prepare your taxes, optimize deductions, and avoid errors. Whether you expect a big tax return or you need to set up an IRS installment plan, a qualified accountant can strategize a path for you.
Should You Hire Both?
Whether you should hire both depends on your financial goals and the size of your business. Small businesses may hire just a bookkeeper to keep general finances in order, while larger companies hire both accountants and bookkeepers to cover complex financial data. If you own a small business, you might hire a bookkeeper who can also perform basic accounting tasks, or vice versa. As your company grows, you should consider hiring both so they can support each other and streamline your accounts.
Should I Outsource my accounting needs?
Consider your budget before you hire an accountant or bookkeeper. If you don’t think you can afford an in-house team, outsourcing your services can be a budget-friendly alternative. Some companies have services that allow you to outsource your entire team to take care of all your accounting needs.