Bookkeeper vs Accountant

For the accounting/finance side of a business there is a lot to understand especially what expenses you can claim and what are only 50% deductible etc. Having an online accounting software can save time and money and hiring a bookkeeper or accountant to help can ensure everything is done correctly the first time.

Whether you need to hire an accountant or bookkeeper before you start or later in the year will depend on how complex your business is, the structure that has been setup and how much knowledge you have about accounting.

Bookkeeper vs accountant: What’s the best choice for your small business?

If you’re looking to for a professional to help your business sort out its financials for the first time, then you’ve likely done more than a few things right to get this far.

How do you determine what level of financial assistance your small business truly needs? Should you turn to a bookkeeper, an accountant or both? These are the questions I see a lot.

Before making any decisions or just hiring the first person you phoned, the first step is to understand the differences between the two and how an accountant or bookkeeper can help your business.

The first thing is that a lot of people think that bookkeeping and accountant are the same. That is not so both professions work towards the same goals however their daily tasks can be very different.

What do bookkeepers do?

Bookkeepers process a business transactions which can include; completing payroll, recording financial transactions, producing invoices, maintaining and balancing subsidiaries, general ledgers and historical accounts, as well as posting debits and credits. They can help to ensure that IRD filings are completed in a timely manner.

Business owners who are just starting out may opt for a bookkeeper over an accountant as they can provide the finance knowledge that a business owner may lack or complete tasks the owners don’t have time for. Some bookkeepers will come into the office which can help to train an owner on what they need to do later on and others can complete the task virtually depending on the software you are using.

A bookkeeper can be useful to keep your records up to date and compliant ready to be handed over to your accountant at the end of financial year to complete your tax filing.

Cost: Bookkepers tend to be cheaper than accounts and may offer monthly retainer packages depending on the hours required.

Tip: If your Bookkeeper also offers end of year financials check that they are actually a qualified accountant before accepting. I have seen bookkeepers file end of year accounts and haven’t run depreciation and don’t do the ongoing training that accountants do to keep up with the ever changing tax laws.

What does an accountant do?

Depending on the accountant that you hire they provide many services. These can include; reviewing what your bookkeeper has done on a quarterly or bi monthly basis, end of year financials, providing tax advice, reviewing and filing of gst returns that your bookkeeper has reconciled etc. Accountants can also provide strategic advice around cashflow and your business goals.

Accountants normally have more training – requiring an accounting degree and chartered accounting firms also require or train their staff towards a chartered accounting degree which necessitates a certain amount of extra training each year to remain qualified.

Small businesses tend to hire an accountant to complete their end of year financials and consider enlisting more of their services once they start employing staff or require more specialised reporting.

Accountants can be helpful when looking at ways to upgrade and improve how a business is run and what software can be used to save them time.

Cost: Accountants may offer a fixed monthly fee based on the size of your business to complete everything for you or charge on a time and cost basis.

Tip: Research the accountants you are going to use before hiring one and look at what your needs are in regard to services. Is a chartered accountant a better option for your business? Chat with friends who are also in business who do they use and why? This can be a good starting point for your search. Do you require a large big 4 firm (Deloitte, PWC, EY, KPMG? a smaller second tier firm (RSM, Grant Thornton, BDO), or will just a small home accountant be the best for your business.

Best of both worlds

The two roles complement one another and it’s not uncommon for many small businesses to employ the services of both. Bookkeepers will also attach receipts to transactions which will reduce the amount of queries that your accountant has for you. Apps like Hubdoc can help you complete this process easily.

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