The terms accountant and bookkeeper seem to be similar for those who are not aware of the industry. But there are some differences between both professions.
A bookkeeper helps in managing your financial books by:
- Keeping track of the business transactions
- Accounts management
- Financial data recording
All these tasks collectively are known as bookkeeping.
On the other hand, an accountant makes use of this data to analyze the health of finances. They prepare reports that help in business decisions. An accountant can handle the responsibility of a bookkeeper. But a bookkeeper beginner can never replace an accountant. To know more about accountants and their services, you can visit the site Edinburgh accountants.
Before deciding whether to appoint a bookkeeper or an accountant, you should know your business needs. Let us understand the difference between both of them and the advantages they give to your business.
A bookkeeper may hold a business or a graduation degree, but it’s not necessary. Many brilliant bookkeepers do not have the required business degree. Still, they are masters in their work because they have years of work experience. Good bookkeepers keep themselves organized, have good number skills, and are quick in problem-solving.
The Bookkeeping profession involves the following responsibilities:
- Day-to-day Transaction Recording. Reviewing the document source and putting journal entries in the accounting application.
- Reconciliations. Reconciling the Statement of the Bank with books of Accounts. Analysis of the general ledger to see that financial information gets recorded in the correct accounts.
- Data Entry. Financial data recording is required to process payrolls, history of debits and credits, and generation of financial reports. A bookkeeper makes necessary changes to the employee tax withholding and wage rates to calculate the net pay accurately.
- Monitoring of Money. Tracking accounts payable to make sure vendor payments are on time. The bookkeeper also checks the account receivable and assists in the collection for improving cash inflow.
Hiring a bookkeeper for your company saves time for you. They help in bringing down financial errors and assist in the generation of accurate financial reports. Few bookkeepers may give tax preparation services for small-size companies.
If you are not willing to appoint a full-time bookkeeper, some options are still available for you. Bookkeeping software will help you record business income and expenses. Still, bookkeeping management will consume your productive time.
You can also choose to hire a part-time bookkeeper or pay on a contract basis. It helps to take away the responsibility of bookkeeping from you. You can get virtual bookkeeping services from professionals present across the country.
The role of an accountant demands a high level of education and expertise. An accountant uses the financial records of the bookkeeper for analysis of the broader picture of finances. They help the management make intelligent business decisions.
To qualify as an accountant, a person needs to have an accounting degree. It is necessary to register themselves as Certified Public Accountants (CPA). Accountants must clear the CPA examination to win this title. This qualification value is high in the accounting sector.
An accountant may supervise the work of a bookkeeper. They also provide services related to bookkeeping. Helps in evaluating accounting transactions and directs the process of recordkeeping. The following points get included in their work.
- Financial Statement Generation. Adjusting trial balance. Also, to generate various statements like income or cash flow and prepare a balance sheet.
- Tax Returns. An accountant prepares the financial reports for the generation of tax returns. The IRS receives your business tax filing from the accountant. They coordinate closely with the CPA firm that offers this service in tax season.
The crucial role of an accountant is to give you valuable advice for making some necessary business decisions. Let us assume that you want to buy new equipment for expansion or need more capital. The accountant is in the best position to help you know the financial ramifications.
It is not an easy decision to choose between a bookkeeper or an accountant. A bookkeeper is crucial in managing financial records, whereas an accountant brings expertise and valuable advice. Whether it is a bookkeeper or an accountant you opt for, one thing is for sure without these professionals lies a steep road ahead of success for small businesses.
You will see an increase in accounting transactions during the growth stage of your company. It is easy to manage everything in the initial steps but then as you expand, it is necessary to hand over the professional task to a bookkeeper.
Eventually, you will have to take the guidance of an accountant. With business growth, the need for a professional accountant also grows for keeping an eye on the accounting system. The accountant will make you use your time wisely. You come in a position to make a better business decision based on his valuable advice.