What are the top differences between a bookkeeper and an accountant? In this article, we will help you discern whether you need bookkeeping or accounting services for your business.
What is the role of a bookkeeper?
Bookkeeping today is far more than just entering data and reconciling the bank statements. A good bookkeeper thinks about the needs of the client, and the different processes to get a result.
Good bookkeeping now includes above and beyond this standard process to ‘think’ more about each stage and ask the questions ‘can we do this better’ and ‘is bookkeeping part of the natural business system?’ Have I captured all the relevant information required to produce an accurate result?
Bookkeeping involves the process of recording, analysing and interpreting the financial transactions of a business or individual. The discipline of bookkeeping accounts for a large proportion of the accounting process.
It is a legislative requirement to have up to date financial records to ensure a business pays all necessary taxes and levies. A bookkeeper’s duty is to set up financial statements so that an accountant can easily perform legal and tax management in a timely manner.
A skilled and compliant bookkeeper should be able to produce financial records that give business accurate information about its financial activities. These records are critical to the future success of any business.
A business’s bookkeeping system needs to be well structured to ensure that all financial information is kept track of properly. The best way to ensure that your bookkeeping is being done correctly is to hire a professional to do it.
What is the role of an accountant?
Accounting encompasses a much wider range of financial work. The primary task of accountants, which extends to all the others, is to prepare and examine financial records.
Accountants make sure that records are accurate and that taxes are paid properly and on time. Accountants and auditors perform overviews of the financial operations of a business in order to help it run efficiently.
Accountants focus on the big picture, making sure businesses are compliant, helping them minimise their taxes where possible and focus on their wealth generation together with financial advisors who also play an important role.
Accounting includes designing the company structure, bookkeeping system, establishing controls to make sure the system is working well, tax planning, and analysing and verifying the recorded information.
Accounting also includes systematic and comprehensive recording of financial transactions pertaining to a business and analyzing and reporting these transactions.
The financial statements that summarize a large company's operations, financial position and cash flows over a particular period are a concise summary of hundreds of thousands of financial transactions it may have entered into over this period.
Accounting is one of the key functions for almost any business; it may be handled by a bookkeeper and accountant at small firms or by sizable finance departments with dozens of employees at larger companies.
Who should I call?
The key difference between bookkeepers and accountants is that bookkeepers produce and maintain financial records that accurately report your business' financial activities, whereas accountants play more of an advisory role by helping you minimise your expenditures and tax liabilities, and maximising your business' profits. Ultimately, both bookkeepers and accountants have vital roles to play in helping a business manage its financial standing.
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