What does a bookkeeper do, what does an accountant do, and which do I need for my business? Most people would be hard-pressed to describe the differences that each role performs. They are both critical to managing your business’s finances, but traditionally have varying skills and duties to support your business in different stages of the financial cycle.
This guide will help explain some functional differences between the roles, and why you need both to ensure your business runs like a smooth operator.
What does a Bookkeeper do?
A bookkeeper’s main role is to process the daily financial transactions of a business – money coming into and going out of the business. This is important for any business as if you’re not keeping a close eye then you won’t know how profitable your business is, and things like debt can build up.
Accurate data entry is the foundation of bookkeeping and making sure the numbers match bank statements and any other supporting documentation. Depending on the business requirements, this could include recording sales, sending invoices, tracking customer payments, recording the payment of suppliers, paying overhead expenses (rent, utilities etc.) and payroll.
As a business you are likely to generate your fair share of paper, such as purchase invoices, receipts and expense claims. Thanks to software advances, basic data entry to a large extent is now automated, eliminating human labour and error; long gone are the days of recording transactions into spreadsheets, or worse, by pen and paper!
No special qualifications are needed to become a bookkeeper, though many will get certified and undertake some training, therefore this means bookkeepers aren’t qualified to help you file your business tax return and company accounts.
What does an Accountant do?
While a bookkeeper would record the day-to-day transactions, an accountant’s primary role is to act as a trusted advisor by performing a higher level of financial analysis. These professionals go through vigorous training and standardised exams to become qualified in the field. They analyse the data recorded by the bookkeeper to produce financial models and provide strategic advice in order to support business owners in making informed decisions.
They can help you file your taxes to get the best return, identify growth and funding opportunities , analyse the cost of operations, plan capital purchases or other investments, and strategise how to scale the business.
Accountants use the financial information recorded to reveal the bigger picture on how a business is performing and its path to progression.
Have the best of both worlds
Whether you’re a contractor, sole trader, start-up or small business owner, retaining the services of a bookkeeper and an accountant is essential. Organised financial records by a bookkeeper, coupled with smart financial strategy and accurate tax filing from an accountant, contribute directly to the long-term success of every business.
Addition Accounting is an end-to-end solution that provides both bookkeeping and accounting services to help manage a business’s finances. This also leaves more time for business owners to turn their dreams into reality and grow their ventures, rather than fussing over financial ‘paperwork’.
Our low rate monthly plans are designed to work – and grow – with your business and can be adapted to whatever services your business requires. Send us an email or request a callback to speak to one of our consultants about tailoring a plan that meets your business needs.