Bookkeeper vs Accountant: Which one do you need?
If you are a business owner or self-employed individual you need to have the right persons in your team. A bookkeeper and/or an accountant are some of those key persons to have a business set up for success. Getting to know the difference between these two will help you decide which one you should hire first.
To get to know what is the best option for you let’s dive in into the Bookkeeper and Accountant roles:
This is a detail oriented person that has to keep track of the daily transactions like Income and Expenses, invoice processing, vendor payments, inventory, sales tax, reconciliations and sometimes payroll processing among other things.
You can have an Accounting Software like Quickbooks Online to help you with this role, however, you still need to have a level of knowledge to properly reflect the transactions that feed your financial reports. Bookkeeping is not done just by accepting transactions from your bank, there are rules to follow, adjustments to make, and reconciliations to verify all the information is complete and accurate.
When bookkeeping is not done correctly you could be over or under estimating your income and/or expenses which means you are also over or under paying taxes. Additionally, even though this is a job that you can do if you have at least some basic knowledge, you need to keep in mind it is time consuming. The best is to outsource so you can focus on your business and the income generating activities that were the reason you started your business.
Now that you have all your transactions in your books, the accountant’s job is to analyze and review it to make sure the information is accurate and properly classified. They are going to create adjusting entries like depreciation and inventory adjustment if necessary before getting your final Financial Reports for tax preparation.
After your Balance Sheet and Income Statement (this last one also known as P&L) are ready the accountant will complete your federal and state tax returns for the business.
If you’ve got a handle on the daily tracking of your transactions but need a better understanding of what the numbers say about your business, it’s time to seek an accountant. They can help provide clarity about your cash flow, profitability, and other aspects of your business, plus they can prepare the accrual-based financial statements that are required by financial institutions for business loans. If you want to grow, you will eventually need to have an accountant and bookkeeper on your team.
At My Books and Taxes we have what you need. Contact us at firstname.lastname@example.org or book a call.