The roles of a bookkeeper and an accountant may overlap, but there are crucial differences between them. If you understand the differences, you can determine how these roles should be filled within your own business model. Let's have a look at what each of them do and whether you need one or the other, both, or neither!
What Does a Bookkeeper Do?
A bookkeeper carries out all of the essential clerical functions of your business' finances: recording your data and organizing it for you. Traditionally, bookkeepers enter financial transactions into a journal, making any necessary adjustments. They enter sales into the proper accounts, record payments from clients or customers, and payments to vendors. They reconcile bank accounts, compile data for the general ledger, generate reports, and prepare financial statements.
What Does an Accountant Do?
Accountants provide informed analysis of your bookkeeping data and, ultimately, can help you make better business decisions. They help you interpret your reports in the context of ever-changing regulations, marketplace conditions, business and industry trends, and so on. A good accountant remains objective, providing unbiased advice. Translation: they're not afraid to tell you hard news. They make their recommendations based on one thing and one thing only: a company’s overall financial picture. But perhaps most importantly, an accountant can help you prepare and file business tax returns. (If your business structure is complicated or you've grown exponentially, an accountant's tax prep services will be worth its weight in gold.)
Can I Be My Own Bookkeeper or Accountant?
The short answer is yes, but there are some caveats.
You can likely manage your own bookkeeping tasks, but with some help. Web-based business accounting software allows you to quickly enter transactions, send out invoices, record payments, and download your bank and credit card statements. You can even run your own reports whenever you want them. So ultimately, it is possible to run your own bookkeeping so long as you have the right tools to ensure that you're not spending insane amounts of time doing so.
As for being your own accountant, it's probably safer to leave it to the experts. A good accountant is certified and has undergone years of education in business finance and tax. That knowledge is their value to you in both being able to help you make sound business decisions and file and pay your tax obligations appropriately. And again, you've got a business to run. Tackling your own accounting will likely result in even more time spent than trying to own your own bookkeeping. Plus, employing the services of an accountant gives you peace of mind: you've got a trusted ally who can help you should issues—like an audit—ever arise.
So When Should I Seek Out an Accountant?
The best time for you to engage the services of a professional accountant is during the initial setup phase of your business. Doing so will help the accountant know your business from the beginning, get familiar with your business accounting software, and understand the goals you have for the business. (Learn more about getting started with Kashoo.) Bottom line, the better your start, the better you're setting yourself up for long-term success.
To Sum Up…
A bookkeeper and an accountant do two very different things. A bookkeeper inputs and organizes your financial data so that your business can run smoothly on a day-to-day basis. An accountant helps you assess the big picture and respond to the shifting complexities of the business environment and with tax prep, payment and filing requirements. Can you handle your own bookkeeping? Sure—until your business grows to the stage at which you no longer need to saddle yourself with tasks like that. On the flip-side, can you handle your own accounting? Perhaps, but engaging an accountant does your business a world of good and provides peace of mind.