While both bookkeepers and accountants are vitally important to the well-being of any business, they’re often confused for performing the same tasks. Though they share the same long term goal of assisting a business succeed financially, they achieve this goal in different ways – and we appreciate them both for the security and peace of mind they bring! What is the difference between a bookkeeper and an accountant? Here are a few of the different ways in which an accountant and bookkeeper work to see businesses thrive.
What does a bookkeeper do?
In short, a bookkeeper has a close up view of a business and is responsible for managing a general ledger, or the daily financial records of all the businesses’ debits and credits. Clean records need to be maintained in order to produce accurate financial statements and reports. These are crucial to understanding the health of a business or ensuring payment deadlines are being met! Smart business owners know how important it is to understand where money is going, so decisions can be made based on revenue and expenses.
In brief, here are some of the most common tasks a bookkeeper performs. For a more detailed description, click here:
- Recording all daily financial transactions
- Posting debits and credits
- Drafting invoices
- Managing payroll
- Keeping and balancing ledgers and accounts
In replacement of a traditional, in-house bookkeeper, virtual bookkeeping is something many businesses are taking advantage of these days. What are the benefits of a virtual bookeeper? Hiring a virtual bookkeeper, or a remote bookkeeper, to maintain the financial records of your business allows for more options in who you hire because this person doesn’t have to be local. A virtual bookkeeper also saves business owners from any added overhead expenses, insurance provisions, etc. that would need to be handled for a person working in house. Another nice feature to hiring someone off-site is that a remote bookkeeper typically allows the business owner to pick and choose which tasks are most important to manage and forgo the ones that aren’t.
What does an accountant do?
An accountant takes a more high-level look at a business by keeping track of the bigger financial picture of the given company. Accountants utilize the detailed records of a bookkeeper to analyze, summarize, consult and create reports on the finances of a business. Without a skilled bookkeeper, an accountant isn’t able to accurately perform their primary functions. Certified Public Accountants, or CPA’s are often the ones who provide the overarching financial advice and all of the critically important tax assistance, whereas a bookkeeper isn’t required to have a specific degree to legally perform their job.
Some of the tasks most commonly performed by an accountant may include:
- Preparing and filing tax returns
- Advising businesses on financial matters, taxes and compliance concerns
- Analyzing the information recorded from the bookkeeper
- Communicating with the owner less frequently, but specifically during tax season
The accounting process is also a bit more subjective than that of a bookkeeper, whose tasks are more transactional and require extreme attention to smaller details.
Is a bookkeeper or accountant more important for a business?
In reality, they’re both incredibly important! The better question to ask what your unique business needs and how it can thrive with both.
An accountant cannot function well without a great bookkeeper, and there are certain tasks a bookkeeper may not be able to accomplish that a CPA may.
However, if you’re looking to stay within a specific budget (and who isn’t?), a bookkeeper is likely to be a more affordable option for maintaining the financial health of your business – especially a remote bookkeeper! It’s not uncommon for business owners to choose to hire an accountant only for the larger yearly analysis of the business, consulting or larger tax requirements to save on expenses, while keeping a bookkeeper for the daily and monthly record keeping and overall organization.
It’s worth noting that both are commonly able to provide a package of tasks based on your budget, so you’re not missing out.
To stay organized and be up to date with your business’s financial responsibilities, reach out to Coastal Bookkeeping and Mobile Notary Services today at 321-243-7513.