Do I Need a Bookkeeper or an Accountant?
Finding the right accounting professional to meet the needs of your small business can be a tricky process. That’s why we’re going to take a look at the similarities and differences between bookkeepers and accountants so that you can make an informed decision on which one is best suited to help you manage your finances.
We’ll cover topics such as the differences between bookkeeping and accounting services, as well as the importance of financial management, budgeting, tax strategy, payroll, and more. By the end of this post, you should have a better understanding of the differences between bookkeepers and accountants so that you can make the best decision for your small business.
What do bookkeepers and accountants do?
Are you a small business owner wondering whether to hire a bookkeeper or an accountant? Or perhaps you need help managing your finances and don't know which professional to turn to? The truth is, there is a difference between bookkeeping and accounting services.
Both professionals can provide valuable financial services, but depending on the size of your business and your financial needs, one may be better suited for you than the other. Let’s take a look at what each professional does and how they can help your small business.
Bookkeepers are responsible for reviewing financial records for accuracy and completeness. They are also responsible for handling the day-to-day financial transactions of a business, such as …
Recording sales and purchases
Reconciling bank statements
Preparing invoices
Collecting payments from customers
Helping with payroll processing
Maintaining records
Bookkeepers usually charge lower hourly rates than accountants, but their services may not be enough for larger businesses that require more comprehensive accounting solutions.
Accountants provide more comprehensive services such as …
Preparing income tax returns
Analyzing financial information to identify potential areas of improvement or cost-saving opportunities
Performing audits
Offering strategic advice to help businesses grow and succeed
Creating budgets
Advising on investments
Helping manage cash flow
Developing tax strategies
Providing second-opinion reviews of existing systems or processes
Setting up processes that improve efficiency within the company
Assisting with payroll processing
To determine whether you need a bookkeeper or an accountant for your small business needs, it's important to assess your current situation carefully. If you are looking for assistance with simple day-to-day activities such as data entry, then hiring a bookkeeper could be all that is needed. However, if more complex financial advice is required, then it may be best to seek out the services of an experienced accountant.
Similarities and differences between bookkeepers and accountants
It's important to understand the similarities and differences between bookkeepers and accountants when deciding which one you need.
Bookkeepers and accountants both provide essential services to small businesses, but their roles may be different depending on the scope of work. Let's take a look at some of the key similarities and differences between bookkeepers and accountants so you can better decide which one is right for your business.
Both bookkeepers and accountants help keep financial records up-to-date and accurate. Bookkeepers are typically responsible for recording day-to-day transactions, such as issuing invoices, tracking payments, and paying bills, while accountants are typically responsible for more complex tasks such as financial statements, budgeting, tax preparation, and more. They both must adhere to state and federal regulations when dealing with financial information.
The major difference between bookkeepers and accountants lies in the scope of services they provide. While bookkeepers focus on immediate needs like data entry or keeping up with accounts receivable/payable records, accountants specialize in deeper analysis related to long-term strategies like tax planning or providing a second opinion on investments/expenditure decisions.
They also prepare reports that help businesses understand their overall financial health better by providing insights into cash flow management and budgeting techniques. Accountants can also advise on ways to maximize deductions and leverage credits that are available through various tax relief programs. Lastly, they can also handle all payroll processing and filing requirements related to taxes and other benefits.
It is clear that accountants have a much broader range of responsibilities than bookkeepers do. So if you're looking for someone who can help you with your financial management beyond just recording transactions, then look no further - an accountant is exactly what you need!
The level of services provided by each professional varies based on their qualifications and experience, so it's important that you do your research before hiring either one. The best way is by talking with them directly about the type of services they offer. This will give you a better understanding of what each professional is capable of doing for your business needs.
Do I need a bookkeeper or an accountant?
For businesses that are just starting out or do not have complex accounting needs yet, hiring a qualified bookkeeper may provide enough assistance with tasks such as accounts payable/receivable processing and payroll preparation.
However, if your business has grown significantly or requires more expertise in areas such as legal compliance or tax strategy planning, it may be time to consider hiring an experienced accountant for their knowledge of these topics.
Having an experienced professional handle your finances provides many benefits, including peace of mind knowing that all tasks are being completed accurately, and having access to personalized advice based on their expertise.
It is important to understand your individual needs and goals by assessing what types of financial records need to be tracked (for taxes vs legal purposes), evaluating the complexity of those record-keeping tasks (based on the size/type of business), and comparing services offered by each professional (cost vs expertise) before making any decisions about hiring a bookkeeper or accountant.
Doing so can help ensure that you find the best fit for your company's specific needs while avoiding unnecessary costs associated with having an inexperienced person complete those same tasks incorrectly, which could result in costly mistakes later on.
What credentials do bookkeepers and accountants need?
According to Accounting.com, bookkeepers are not technically required to have any sort of college degree, but some bookkeepers do have associate’s or bachelor’s degrees in accounting or business. Those who want to be bookkeepers may choose to get on-the-job training and even get a professional bookkeeping certificate.
They often hold certificates from organizations such as the American Institute of Professional Bookkeepers (AIPB). Additionally, many states may require bookkeepers to obtain a license before they can practice professionally.
Accountants must also be certified and typically possess either a bachelor's degree in accounting, finance, or a related field, or a Master's of Accountancy (M.Acc.) degree. Certified public accountants (CPAs) must pass their certification exam before practicing professionally.
In addition to these requirements, both bookkeepers and accountants must complete continuing education requirements throughout their professional careers to maintain their certification status and adhere to standards of professional conduct in order to remain credentialed professionals.
Ultimately, when deciding between hiring a bookkeeper or an accountant for your small business needs like taxes, a second opinion on financial management decisions, budgeting, tax strategy, payroll services, tax extension, etc., it all comes down to the level of expertise required.
If there are complex matters involved that require more advanced skills than just basic record keeping, then an accountant may be required. Simpler tasks like keeping records up-to-date are best handled by an experienced bookkeeper who is properly certified or licensed depending on state rules where applicable.
In a Nutshell
In conclusion, it is important to understand the similarities and differences between bookkeepers and accountants so that you can make an informed decision on which one is best suited to help you manage your finances.
Whether you need assistance with basic data entry or more complex financial advice, both bookkeepers and accountants can provide valuable services. However, depending on the size of your business and your budget, one may be better suited for you than the other.
We hope this blog post has helped give you a better understanding of which type of professional best suits your needs.
If you need accounting services for your small business, we are happy to provide them! Visit our accounting page for more information or call (205) 463-5260.
