As a business owner, you know that you need an accountant.
After all, who will do your taxes at the end of the year without a numbers whizz?
But then, the term bookkeeper gets thrown in the mix… what do they do?
Bookkeepers and accountants both look after the various aspects of your business finances. Many people use the words ‘accounting’ and ‘bookkeeping’ interchangeably, but they are actually quite different functions.
In essence, a bookkeeper is a record keeper, and they have an administrative, transactional function. An accountant has more of an analytical function, producing insights and information from the financial records.
Clear as mud? Let’s look into the different roles in a little more detail and the main differences between the two.
The Difference Between An Accountant And A Bookkeeper Is…
Bookkeeping is a very important part of day-to-day business. A bookkeeper maintains records of daily transactions. They record all financial incomings and outgoings, create invoices, balance ledgers, take care of payroll, and process debits and payments. It is their job to keep all financial records up to date to make sure that tax and payroll obligations can be met, and end-of-year reporting can be done efficiently and accurately.
A bookkeeper usually utilises the power of accounting software. It means that both you and your bookkeeper have real-time access to the financial position of your business. It also makes it easier to ensure all of your transactions are regularly updated.
Bookkeepers do not usually require any specific training, experience, or education. Their tasks can be learned by anyone with sufficient attention to detail and a good mind for numbers and finances.
However, many bookkeepers regularly attend training sessions and ongoing professional development to ensure their knowledge and skills remain current in an ever-changing market.
An accountant takes the information and records provided by a bookkeeper and uses them to produce financial analysis and reports. Accountants will prepare your financial statements, complete tax returns, provide analysis to help your business make financial and strategic decisions, and also assess operational costs.
An accountant helps a business to get a better understanding of its financial performance, cash flow, and profitability. They can be relied on to help with tax planning and filing and financial forecasting.
Unlike bookkeepers, accountants do require formal education and qualifications. They also have to complete a certain amount of work experience. Most accountants will have either an accounting degree or commerce or business degree with a major in accounting.
They can then go on to become a Chartered Accountant. Once completing their initial qualification, they would then undertake three years of professional accounting experience, and meet other requirements set by Chartered Accountants Australia New Zealand, to become a Chartered Accountant.
How Do They Work Together?
The roles of bookkeeping and accounting are quite different, but they are closely connected. Good accounting relies on good bookkeeping for accurate and up to date data. Bookkeepers often use systems and processes established by accountants.
Regardless of the differences in their jobs, they are both very important for managing and maintaining healthy finances in any business.
How you approach bookkeeping and accounting for your business is up to you. You could take care of your own bookkeeping or have it done by admin staff, then have a third-party service take care of your accounting obligations.
Or you could outsource all of your financial work to an external bookkeeper and external accountant. This has many benefits, including saving your own time and ensuring the accuracy and independence of any financial analysis.
So, what do we do? Here at Accountants Plus, we are Chartered Accountants, Business Advisors and Taxation Specialists. That means we can help you with all of your accounting needs.
If you would like to talk to our experienced small business accountants to find out what would work for your business, then contact us here at Accountants Plus today.