What’s the difference between an accountant and a bookkeeper – and which one does my business need?
They both work with financial data, and they’re essential for managing a successful business. Yet the roles and duties of a bookkeeper and accountant rarely overlap.
If you’re like many business owners, you may not be exactly sure of the differences between a bookkeeper and accountant – and whether you should hire one, or both.
An established, growth-focused company will employ the services of both an accountant and bookkeeper. The two professionals work in tandem, to ensure business financials are up to date and accurate, and the financial health of the company is carefully monitored.
If you’re still in the early days of your business, you might choose to do the bookkeeping yourself, or hire a bookkeeper for a couple of hours a month until it makes sense to bring someone on full time. Or, you may decide for an accountant to be a key player on your team from day one.
Why you need a bookkeepper
The primary role of a bookkeeper is to handle a company’s day to day financial management. A bookkeeper will take care of the small but important details that are essential for providing an accurate picture of where a business stands at any given moment.
In addition to a bookkeeper’s main job – making sure every financial transaction is accurately recorded in the general ledger – they may also lend a hand with other key tasks like invoicing, paying suppliers and vendors, and processing payroll.
Ideally, a company’s books are updated at the end of each business day, so you always have a true account of your sales, expenses and the bottom line. If your business is still in its early stages, however – without a lot of financial activity or the funds to hire a bookkeeper – you should aim to reconcile your own accounts at least once a week.
Remember – your Tide account offers a helping hand when it comes to bookkeeping. All your spend – whether a card transaction or transfer – is auto-categorised, and you can create custom categories to better categorise the spend too. Plus, you can sync your Tide account with a cloud accounting software like Xero, FreeAgent or Sage, so you won’t spend hours reconciling transactions. Best of all, you can do this on the go – whether you’re on the train or on the sofa – straight from your Tide app.
Why you need an accountant
An accountant’s primary role is to help companies make sense of their numbers for the purpose of strategic planning – analysing, summarising, interpreting, and reporting on financial data in order to provide “big picture” business advice.
As a small business owner, you may want to work with an accountant from very early days to help with budgeting, forecasting, and decision making – as well as for strategic tax advice, and identifying opportunities to reduce costs and maximise profitability.
Many business owners think they only need to talk to their accountant once a year, at tax time. But in order to be able to truly gauge the health of your business – and make the most of your accountant’s expertise – it’s recommended you check in with them at least once a month. Your monthly meeting is a chance to review key reports, like profit and loss statements, discuss opportunities or areas of concern, and get timely advice to help meet the goals you’ve set out in your annual business plan.
So I do need one?
As your business grows, it’s essential to have trusted financial professionals managing your books and providing strategic financial advice.
After all, the busier you get, the more complex financial management becomes – and the less time you’ll have to maintain your books and try to make sense of all the data.
A trustworthy bookkeeper’s services are essential for a thriving business, and an accountant can do so much more than handle your taxes. Think of your accountant as a trusted business partner – someone whose services you rely on year round for advice on how to increase profitability as you take steps to achieve your business goals.
Every business is of course different, the best thing you can do is to speak to various accountants and bookkeepers and evaluate your businesses individual needs so that you have the necessary information to move forwards.