Maintaining accurate financial records is vital to keeping any business running smoothly.
One of the advantages to Book-Rite is our connection to an accounting firm with over 20 years of experience. This should make your decision to choose us for your bookkeeping even easier. No matter which one you’ll need, bookkeeper or accountant, Book-Rite has both available to provide the needed assistance.
It is however, one of the biggest questions that face business owners, should you hire a bookkeeper or an accountant? What’s the difference
Bookkeeping vs. Accounting.
“Think of bookkeeping as recording transactions like debits and credits. Accounting, however, is about analysis and insights,” explains Perry D’Alessio, partner and founder of New York City accounting firm, D’Alessio, Tocci & Pell, LLC. “The small and medium business owners who I’ve known, at a minimum, want to ensure that they have adequate record keeping mostly for tax purposes, and then they’ll upgrade to accounting as their business grows and they want to identify opportunities for growth and improvement.”
Bookkeepers, as the name signifies, handle basic keeping of your “general ledger” or “the books”. They need to understand enough about finance to know what details to keep and do so accurately. They don’t legally need to have any specific credentials or certifications, but you will usually find that many bookkeepers have an associate degree.
What do Bookkeepers do?
- Record all Account Receivables and Accounts Payables
- Reconcile bank and credit card statements
- Generate payroll
- Send invoices to customers and payments to vendors
These transactions are usually kept in an accounting/bookkeeping software application such as QuickBooks or Xero. This can be done on your computers, our servers or on the Cloud – so you can have instant access to your company’s financial data.
What do Accountants do?
Using the ledger created and maintained by the Bookkeeper, accountants can make projections, set business goals, and offer financial advice on how to manage and grow the business. Unlike a bookkeeper who simply records transactions, your accountant adds consulting. Many business decisions rely on the information that an accountant offers up to a business owner.
Accounting duties may include:
- Prepare financial statements, cash flow reports, income statements, balance sheets, and earnings projections
- Help with accurate budget planning
- Prepare and file taxes, including income tax, sales tax, and payroll taxes
- Act as a financial counselor for how actions like consolidating debt or investments will affect the company overall
- Manage overall profitability and growth through reports and models
Accountants can act as advice-givers for changes that happen in the tax and finance spheres. When new tax laws are passed, accountants can help business owners adjust their strategy. A minimum wage increase or new health care regulation might require consultation with one’s accountant to measure the effect it will have on a business.
Does my business need a bookkeeper or an accountant?
Depending on the size and goals of your business, you may find that you need both professionals to keep your business running smoothly. Outsourcing the Bookkeeping function normally provides a small to medium size company with the services needed, as well as provide cost savings vs. hiring inside staff. The bookkeeper will maintain the general ledger on a monthly basis, and when needed you can use our accountants to provide the extra support required.
When Should I Hire a Bookkeeper or Accountant?
There is no better time to hire an outside Bookkeeper then when you realize that you need help to keep your business running smoothly and stay compliant with sales taxes, payroll and tax requirements
- Do you plan to receive funds from loans or investors that will require to step up reporting and projections to meet the requests of the banks or investors?
- Did you hire employees, provide benefits, and have an increasing responsibility to document our efforts?
- Are you often faced with loads of paper work, invoices, receipts, etc. but don’t know how to put them into readable financial statements, projections, or reports?
- Are you spending an increasing amount of time doing bookkeeper or accounting tasks? Would your time be best spent elsewhere?
- Are you compliant or at risk of audit?
With something as important as your financial records, however, it’s best not to wait until your books become a problem. Being proactive about getting outside help for your bookkeeping and accounting requirements is the only way to address the growing needs of any company.
So please contact us for a free consultation.