One of the first responsibilities that small business owners tend to delegate is that of keeping up with their financial records. This is a crucial step in any business, as you’re trusting someone to help you make sure you have all your ducks in a row for purposes such as analyzing your finances and end-of-year reports needed for taxes.
When looking for someone to help them, many business owners have trouble figuring out if they need a bookkeeper or an accountant. In many cases, having both is the preferred course. If a business is just getting off the ground, however, they may only be able to afford one or the other. This raises the question of which one is best for the business.
Let’s take a look at the different activities performed in these positions.
Wait – Aren’t They the Same?
Before we get started, let’s dispel the common myth that bookkeepers and accountants are one in the same.
These are two different positions that often get lumped into the category of “financial caretaker”. Some financial firms can cover all of the tasks performed by a bookkeeper and an accountant, but it’s more common to find someone serving in only one of these roles. This is something to keep in mind when seeking help with your business or personal finances.
What Does a Bookkeeper Do?
Bookkeepers are defined precisely by their title: They keep your financial books in order. This includes tasks such as:
– Recording all transactions taking place in the business
– Categorizing those transactions in a database
– Reconciling financial statements from banks, credit cards, etc.
– Inputting invoices and/or bills
– Organizing and maintaining order in your financial database
In most cases, bookkeepers do not perform services like tax filings and finance advisory. They may assist with building a budget based on past performance, but likely cannot and/or will not create reports for potential future finances.
What Does an Accountant Do?
Accountants have a more hands-on approach when it comes to handling the finances within a business. They may offer limited bookkeeping services, but it’s more likely that they will suggest you handle your own books or find someone else to organize and create the reports that the accountants will use for their job.
Accountants may perform tasks including:
– Performing financial analyses based on monthly or quarterly performance
– Assessing financial reports for building financial forecasts
– Auditing financial information for accidental or intentional mistakes
– Providing tax services like filing and planning
– Advising business owners on decisions regarding finances or tax planning
Which Do I Need, a Bookkeeper or an Accountant?
To figure out which one would work best for you, or if you should plan on hiring both, there are several questions you need to ask yourself.
– Do I dislike keeping up with the incoming and outgoing transactions I make for my business?
– Am I doing a bad job at keeping up with my own books?
– Is my business growing faster than I can keep up with?
– Do I have a lot of transactions going in or out that are making it hard for me to understand my own finances?
– Do I have time to actually handle all of my financial aspects, or can I not keep up?
If you answered yes to any of these questions, then it’s time to consider hiring financial help. Your first step should be to hire a bookkeeper, as they can help you get everything organized and in good order. If your books are a mess, an accountant will either require you to clean up your books or find someone to do it anyway, so having a bookkeeper before hiring an accountant is a great way to save yourself time, money, and headaches.
Are you ready to take the first step in cleaning up your finances?
Whether you’re needing help for your small business or your personal life, Fat Cat Bookkeeping has experience in getting your financial information organized and easier to understand. Contact us today to learn more!