Does My Small Business Need an Accountant or a Bookkeeper?

New business owners who don’t know a lot about financial services often make the same mistake: thinking that bookkeeping and accounting services are the same. Before you hire a financial expert to assist with your business needs, it’s important to understand the distinct differences so you know whether to hire an accountant or bookkeeper.

Managing Your Business Financial Operations

In the earliest stages of getting a business off the ground, it’s common for business owners to handle financial details such as invoicing, payments, payroll, and other financial activities. Usually, the motivation is to reduce expenses so more money is available to reinvest in the areas where the business needs extra support.

The problem is that most business owners don’t know the specific strategies for business financial management. Even if you are doing your best to keep up with financial tracking and invoicing, you might be making mistakes that cause long-term issues with your reporting. Seemingly small mistakes, like overlooking an expense or entering the wrong invoice amount, can cause a domino effect. For example, if you run a financial report and the numbers are incorrect, then it could result in cash flow issues because you are making business decisions based on false information.

Invest in an Accountant or Bookkeeper

You are already carrying a lot of responsibility as you oversee the ongoing activities within your company. There is no reason why you should be caught up in the day-to-day busywork, such as data entry and report generation. Instead, hiring an accountant or bookkeeper is a great investment that can help your company grow.

The more you resist delegating busy work to others, the more YOU will be the bottleneck that slows your business growth. Handing off certain responsibilities, such as accounting and bookkeeping, gives you more time during the week. Use this extra time to focus on activities that help your company grow in the future.

In fact, outsourcing might be one of the best investments you can make for your business. If you want to maximize your time, then it’s essential that you have quality systems in place – and a good support team to keep up with the ongoing work to manage and maintain those systems. Accounting and bookkeeping are the foundation that ensures you have the cash to keep everything else running in the company.

What is the Difference: Accountant or Bookkeeper?

Here is an overview to help you understand the difference between an accountant or bookkeeper:

  • Bookkeeper Role: Hiring a bookkeeper means that you are bringing on a team member who is responsible for managing data in your books. Not only does a bookkeeper stay current with the ongoing transactions, but these tasks are completed often to keep the records up to date. Bookkeeping services are focused on transactions, including all expenses and income. Additionally, bookkeepers help with ongoing financial tasks, such as payroll, invoicing, and more. The foundation of bookkeeping services is based on ensuring that the accounting system is populated with accurate data at all times. These services support the overall financial system so reports can be pulled and bills are paid at the right time.
  • Accountant Role: Sometimes, small business accountants handle some of the bookkeeping duties listed above. Or, an accountant often oversees the bookkeeper to ensure transactional data is correct. Other accounting responsibilities might include general ledger entries, billing, payroll reconciliation, and a review of accounts payable activity. While a bookkeeper is focused mostly on the transactions moving through the accounts, an accountant works more on the side of cash flow management, tax preparation, and other details needed for managing the financial health of a business.

If you need all of the services listed above, then you might be better hiring a team that offers financial management – including both bookkeeping and accounting in the same service.

If you require services to look at the longer “big picture” financial perspective of your company, then you might benefit from the services of a Chief Financial Officer (CFO). Outsourced CFO services can be helpful in helping the business thrive based on in-depth financial management and strategy implementation. CFOs also oversee other financial responsibilities, like capital structure, investments, equity, and debt.

Education Requirements for an Accountant or Bookkeeper

It’s also important to note that there is a difference in training for an accountant or bookkeeper. Anyone can become a bookkeeper with on-the-job training and no formal college degree. On the other hand, accountants are required to have a minimum of a four-year college degree. These education requirements mean that an accountant has a higher level of both experience and expertise compared to the services you receive from a bookkeeper.

An additional credential can be earned after the four-year degree is complete. If you hire a Certified Public Accountant (CPA), then it means that the person has met requirements for additional education and testing to earn this certification.

Separating Duties and Hiring the Right Team

While all of the duties listed above fall into the “financial management” category, it’s essential that you have a clear separation of duties and an understanding of where the responsibilities lie. Building the right team gives you access the skills that are needed. Additionally, this separation of duties minimizes the risk of fraud in your company.

For example, if you have a bookkeeper paying the bills, then they should not be the same person reconciling the accounts every month. When at least two people are involved, it reduces the likelihood that someone will be able to steal money or adjust the accounts for financial gain. Always have solid checks and balances in place when you have an accountant or bookkeeper helping with financial tracking and responsibilities.

Here’s a quick example of how you might separate the duties to build checks and balances into your financial system:

  • The bookkeeper is responsible for entering the data.
  • The accountant is responsible for reconciling the work completed by the bookkeeper.
  • A business owner, CFO, or controller is responsible for supervising the work of both the accountant or bookkeeper.

Changing Business Needs as Your Company Grows

In the earliest stages of launching a business, your accounting and bookkeeping needs are basic. It’s still valuable to hire an accountant or bookkeeper at this point so you can build a solid financial foundation to support potential growth in the future. Having good systems in place increases the likelihood that you will be able to minimize growing pains when you are ready to expand.

But don’t get stuck in the rut of assuming that your current services are always right for your changing business needs. It is common for accounting and bookkeeping systems to shift as the company expands. When you bring on new employees, increase your business offerings, or expand to another location, then make sure you have the financial support to track all related expenses through these growth stages.

In the beginning, you might benefit from an outsourced accountant who takes care of tax strategy and filing throughout the year. As your business grows, it can be helpful to hire a bookkeeper who takes over more of the financial responsibilities. A growing business means that you only have so much time during the day to keep up with expanding responsibilities – so it’s critical that you invest in the right services to support your needs over time.

Outsourcing vs. In-House Hiring

When you can see that you require services from an accountant or bookkeeper, you might consider the option to hire another employee so these duties are handled in-house. Before you bring on an employee, consider the salary requirements and overhead costs that will be incurred. Most of the time, small businesses don’t have the budget for a full-time financial employee.

But just because you are in the early stages of growth, doesn’t mean that you don’t have access to professional accounting or bookkeeping services. Outsourcing can be a great way to manage your monthly costs while still tapping into the financial support needed for your business.

Outsourced accounting is a fraction of the price you would pay for a full-time employee. You can benefit from these professional services without carrying the financial burden of paying a full-time salary.

Easier Accounting Specializes in Small Business Accounting

Our team at Easier Accounting offers the outsourced accounting services you need. If you are a small business owner and you are considering your options to hire an accountant or bookkeeper, then we invite you to reach out and learn more about the full range of services we offer.

By specializing in small business accounting, we are confident that our services are a good fit for startups and entrepreneurs. Contact us to learn more about the available services to see if our team is the right solution to meet your business needs. We offer a proactive approach to managing small business finances, including accounting and bookkeeping services custom-designed to your requests. Learn more by calling us to talk to a financial pro about your options: (888) 620-0770.

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