How to Know if You Need a Bookkeeper or an Accountant
At some point during a business’s expansion, there comes a need for more professional financial help. Perhaps you need extra help with your bookkeeping, legalities of financial matters, funding, and minimizing corporate tax. Now you’ve got two steps to take: hire a bookkeeper and hire a CPA.
Although both of these financial professionals do important work, there are significant differences between the two. You’ve got to know what each of them do before you can hire either.
What do Bookkeepers do?
Bookkeepers are tasked with the responsibility of keeping track of the books. They are able to set up a basic financial system on an accounting program, like QuickBooks, and keep track of the financial records of a company. Bookkeepers are able to make sense of financial information so that business owners, managers, and accountants can use them for strategic decision making and other purposes.
Most of the daily money-related tasks of a company can be handled by a bookkeeper. A great one may even be able to help you understand the little details that you may not be able to make sense of.
Bookkeepers can carry out tasks such as recording invoices and payments from clients, recording cash expenses, and expending money to pay bills, managing payroll and paying employees, reconciling bank accounts, advising on record keeping methods, and cash flow forecasting.
What do Accountants (CPAS) do?
Accountants are financial professionals who can make sense of the financial information prepared by skilled bookkeepers. They have the technical training to advise clients on quite a range of financial issues. They can create financial reports and fill out tax forms as well. Although accountants are more than capable of carrying out basic bookkeeping duties, they’re also able to prepare and report on financial statements and make sense of them. Certified Public Accountants, also known as CPAs, are accountants who have completed training offered by their state board of accountancy. They have completed the required technical training as well as the required experience and will continue to complete ongoing education in order to keep up with the latest laws and regulations.
CPAs are tasked with the responsibility of verifying the accuracy of accounting records and ensuring that they’re complete and up-to-snuff. They also prepare financial statements and tax returns and can give counsel regarding tax law and company structure. They can also offer invaluable insight to management regarding financial decisions and other strategic decisions.
What do both of them do?
Bookkeepers and Accountants are able to give strategic counsel to their clients. However, they may do so a little bit differently. Bookkeepers may be wonderful at giving you advice on how you can streamline and simplify your accounting process or how you can put together a realistic budget. An Accountant, on the other hand, will be able to give you suggestions on how to minimize your tax liability or discuss the tradeoffs of different business structures. There are Bookkeepers that offer tax prep as well!!
How do I know which one is right for my business?
The majority of small businesses actually hire both a Bookkeeper and an Accountant. Bookkeepers manage the daily money matters of the business and keep an eye out for major changes and other big financial issues that may need to be addressed. They have a pretty thorough understanding of the operational needs of the business, seeing as they manage it from day-to-day. They also keep tabs on when certain things come along that require the specialized skill of a CPA.
Whether you’re looking to hire a Bookkeeper, an Accountant, or both, you need to make sure that the person you hire is someone who you can trust. Start by asking for recommendations and referrals from people within the industry that you trust. Do some research and call them. Professionals will be responsive. You should be able to tell the wheat from the chaff pretty easily. Remember - incredible financial professionals are hard to come by. Don’t just choose an Accountant or a Bookkeeper because they don’t cost much. Choose someone who you know will do incredible work for you!
Totally Booked offers bookkeeping by QuickBooks Certified ProAdvisors based out of NYC. Get in touch today to see how we can help!