If you’ve been around the business world for longer than a few minutes, you’ve likely heard the terms “bookkeeper” and “accountant” thrown around. Many believe they are synonymous, but the truth is, they are not!
It’s important to understand how a bookkeeper’s and an accountant’s roles differ when it comes to supporting your business. While we always advocate for learning and doing as much as you can yourself, these are two positions where you will want to rely on trusted experts to help guide you in financial decision-making.
Before going any further though, we want to point out that your business financials are an ever-changing thing and at times, could require even more assistance than just a bookkeeper or accountant. If you ever have a doubt about how to best progress financially, ask more questions and do more research. Your industry, size, and / or product / service all contribute to the needs of your business and the more you know how to navigate those factors, the more success you will see.
Bookkeeper vs Accountant: What’s the Difference?
Bookkeeper
A bookkeeper’s job is to handle the day-to-day financial pieces. They help manage transactions, reconcile payments, assist with payroll (if necessary), and create reports.
Bookkeepers often offer some sort of tracking system that allows you, the business owner, to enter information to keep your financial records straight and accurate. Sometimes the system is a software program that comes with an app, and other times it is simply a spreadsheet designed specifically for your business.
Without question, a bookkeeper’s goal is to support your business financially by providing accurate, up-to-date information about your finances so that you can make bigger, well-informed decisions.
A bookkeeper does NOT file taxes for your business. They also do not often have all of the knowledge or credentials needed to give long-term financial advice (although depending on their experience, they may be able to share some insight).
Accountant
Certified Public Accountants (CPAs) are required to pass an exam and maintain certain credentials in order to provide accounting services. Their education provides them advanced understanding of tax laws, requirements, and rules to apply to a financial situation.
Having a CPA to help navigate your business’s finances is crucial to avoid tax penalties, significant losses, and more. Even as a small business, you could be facing serious financial consequences if you are not aware of the tax rules that your businesses must abide by.
Accountants are big-picture focused. They look at your financial statements (ideally each month) and advise you on ways to save on taxes both in the future and during your current tax year. They help to implement important tax strategies that will support your business and keep you from facing avoidable penalties.
Your accountant will be in charge of preparing and filing your tax return, creating quarterly tax estimates, and advising you on tax changes. By maintaining frequent communication with your accountant and supporting their effort to understand the whole picture of your business financials, you should expect to feel more secure financially!
Does a Small Business Need Both an Accountant and a Bookkeeper?
The big question remains: do you need both an accountant and a bookkeeper?
As a small business, it’s understandable that you are trying to keep expenses low as you work to grow or support your current business position.
While many small business owners choose to manage the bookkeeping themselves (and this can work in certain instances), it is our professional advice that every business owner have a trusted accountant to help guide them. Ultimately, the financial risks are greater without an accountant and therefore should not be taken.
When it comes to bookkeeping, your business model might be basic enough to manage on your own. However, when things start to take off or your business profits, expenses, or volume greatly fluctuate, we recommend tagging in a bookkeeper as well to keep things from getting messy.
If you want to avoid feeling anxious or uncertain about your business finances, hire an accountant to oversee things! And when you’re ready for a killer bookkeeping team, reach out to us! We are here to support you every step of the way.
The content in this blog post is provided for general informational purposes only and should not be considered professional tax or legal advice. The author is not a Certified Public Accountant, and no assurances can be made regarding the outcomes or consequences of tax returns, IRS actions, or any financial decisions based on this information. Readers are strongly advised to consult with a qualified tax professional or legal advisor for personalized guidance specific to their individual circumstances. The author expressly disclaims any liability for decisions made based on the information presented in this blog post.
