EA - Bookkeeper vs Accountant - Different Services for Your Business

Bookkeeper vs. Accountant: Different Services for Your Business

How often have you heard the terms “accountant” and bookkeeper” used interchangeably? If you don’t know about the differences in the services, then it is easy to see how you might be confused about these professions.

Yes, both accountants and bookkeepers work with financial reports, organization, and tracking. In fact, the services offered by an accountant and bookkeeper often overlap. Some firms offer both bookkeeping and accounting services. But their purposes, focus, and skillsets vary depending on the person that you hire.

Services from a Bookkeeper

The term “bookkeeping” is used in reference to services that are rendered for organizing, storing, recording, and retrieving financial information. Usually, a bookkeeper is involved in the ongoing transactions that are moving through your bank account. This person oversees a portion of the accounting process, usually focused on the classification and recording of the daily transactions such as bill payments, payroll, sales, and more.

The purpose of hiring a bookkeeper is to maintain the organization and accuracy required to ensure correct information on financial reports. A bookkeeper spends their time working on record keeping. They don’t spend as much time on analytics or financial strategy.

Keep in mind that a bookkeeper isn’t required to have a four-year degree. As a result, bookkeepers usually have less education compared to accountants.

Services from an Accountant

The accountant uses the information that was compiled and organized by the bookkeeper. Often, accountants are involved in tax strategy, tax filing, financial reviews, auditing and more. Accounting services take it a step beyond bookkeeping services by analyzing the reports, reviewing the information, identifying trends, and interpreting the information. When the data is turned into reportable information, then you can use the details as you are making big decisions for your company.

Accountants are required to complete a four-year degree as well as extensive training and certifications. These requirements ensure that your accountant understands the financial laws, strategies, and other steps that need to be taken to care for your business finances.

Different Stages of Financial Management

As you can see, the services that come from a bookkeeping team and accounting team go hand-in-hand. Even though their services are different, these professionals often work in tandem. The combination of a strong accountant with a detail-oriented bookkeeper is essential to bring clarity to your business finances.

If you need someone to help with the day-to-day processes, then you will likely benefit from the support of a bookkeeper. On the other hand, if you are looking for support with the bigger picture and tax strategy, then you should turn to an accountant for support.

When it comes to the daily and weekly financial management, a bookkeeper can support with a range of tasks:

  • Tracking transactions moving in and out of the financial accounts
  • Managing and logging transactions to ensure accuracy on the reports
  • Evaluating payments, sales, receipts, and purchases
  • Calculating payroll and processing payments for employees
  • Overseeing invoices and payments for contracted workers and suppliers
  • Monitoring accounts receivable to ensure cash flow throughout the month
  • Completing monthly financial closing and bank account audits as needed
  • Using bookkeeping and accounting software to ensure accuracy

Keep in mind that the bookkeeper’s activities and tasks vary depending on the size of your company and the transactions that are moving through the account each day and week. When many transactions are coming through each day, then you might need bookkeeping services throughout the week. But some small businesses don’t need the services of a full-time bookkeeper, so it often makes sense to hire an outsourced bookkeeper instead. Typically, the services of the bookkeeper will expand as the business grows.

As you look over the bookkeeping tasks, you can see that they provide the foundation needed to support your business financial health. Then, the accountant steps in to use the data generated by the bookkeeping activities. Accounting services often include:

  • Tax analysis and strategy to minimize payments to the IRS
  • Completion and filing of income tax returns
  • Answering questions and helping business owners understand the applicable financial regulations
  • Financial statement analysis and business strategy support

Do You Need an Accountant or Bookkeeper?

How do you know who to hire when you need financial support for your company? It is important to distinguish the services so that you can choose the level of expertise required for your business.

While a bookkeeper is a cheaper solution, they don’t offer the financial expertise that comes from a small business accountant. In most cases, business owners find it beneficial to engage the services of both a bookkeeper and accountant, with the bookkeeper working on daily transactions and the accountant offering periodic advice.

Don’t overlook the benefits of a financial team that can provide both bookkeeping and accounting services. It can be beneficial to keep all of these tasks with the same team, ensuring optimal communication and the best strategy when everyone is working together.

How to Tell When You Need Financial Support for Your Company

Is it time for you to hire a bookkeeper or accountant? It might feel like a challenge to determine the right timing in bringing in a financial professional. But, as a business owner, remember one important tip: it’s never too early to bring in accounting and bookkeeping professionals.

Even if you are just getting your startup off the ground, you have the opportunity to work with an experienced team. This professional advice can help you create the right financial foundation and set your company up for success in the future. Business owners who hire accountants and bookkeepers in the early stages of growth rarely regret the decision.

Benefits of Hiring an Outsourced Accountant

It probably doesn’t make sense for your small business to hire a full-time accountant. Bringing on another in-house employee raises your overhead expenses and puts added financial strain on your cash flow. Instead of hiring an employee, consider the benefits of using outsourced accounting services.

The main benefit of outsourcing this part of your business is that you can save both time and money. You don’t have to spend your hours crunching the numbers and trying to make sense of the financial reports. Instead, your attention can turn back to business-building activities because you have the peace of mind in knowing that your accounting and bookkeeping team is taking care of the tracking and analysis.

Plus, these services are essential to help you save money. Even though you will have a bill to pay for outsourced accounting services, you will likely find that you save more money overall. Here are a few financial reasons why you shouldn’t delay the services of an experienced financial team:

  • Improve Tax Strategy: One of the most frustrating aspects of owning a company is seeing how much money goes out the door when it’s time to pay the IRS. Taxes can cut away at your profit margins and make it hard to manage cash flow. An accounting team can evaluate your business and finances, then find the right strategies to minimize the tax burden that needs to be paid each year. These savings can add up to thousands of dollars… often more than you paid for the accounting services.
  • Reduce Error: Consistent tracking and bookkeeping help you avoid common errors that could affect your business. For example, if you don’t have a good system in place to keep track of invoices, then you might overlook payments that should have been made by your clients or employees.
  • Avoid Fraud: Keeping an eye on the financial transactions is essential so that you can avoid fraud and theft in your business? Regular audits, reviews, and analysis will help to uncover anywhere that money might be slipping through the cracks. Even though you should be able to trust your team, you should still have systems in place in case something happens.
  • Increased Revenue: When you spend more of your time on business development and marketing, then it increases the chances that your revenue will go up. As the business owner, you shouldn’t be focusing your efforts on the busy work that can be completed by a bookkeeper or accountant. Your time is valuable, which means that you should be spending your hours on activities that will bring in more money for your company.

At Easier Accounting, we know how important it is that you have a good financial team to support your business goals. We’ve been serving small business owners for many years, offering the best financial services available in the industry. Our goal is to not only ensure your satisfaction, but we go above and beyond to provide unbeatable solutions that will support the growth of your company.

If you have questions about accounting and bookkeeping services, then it is time to contact our company today. We have a team of experienced financial professionals who are ready to create a custom plan based on your needs. Easier Accounting is always here to help. You can call us during regular business hours to learn about the services that are available: (888) 620-0770.

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