Bookkeeper vs accountant: What’s the difference?
A lot of people aren’t really sure what the difference is between a bookkeeper and an accountant, or who does what.
Bookkeepers and accountants, although they often overlap, actually perform different jobs.
They actually work in conjunction with each other, side by side. For the best result in your business, having a bookkeeper and an accountant makes sense.
Let’s break down what bookkeepers and accountants do and why you need them both.
The role of the bookkeeper is essentially record keeping. Their job is to keep track of all transactions and to keep all the numbers in order. Their roles can include:
- Recording your business’ financial transactions
- Sending out credits and debits
- Making invoices
- Preparing financial statements
- Looking after ledgers and accounts
- Doing payroll
You can see how it is an important job. All the nitty-gritty, the financial day to day business is taken care of by a bookkeeper. Without someone doing the bookkeeping you can soon lose track. Come tax time it will be hard to prove the deductions you are owed. And look out if you are audited and don’t have clear records of your finances.
A bookkeeper is like the financial backbone of your business.
If the bookkeeper is the backbone, the accountant is the nervous system. The bookkeeper holds things up but the accountant takes that information, analyses it and puts it to use.
Accountants’ roles include:
- Recording anything that the bookkeeper has yet to record
- Reviewing your business’s financial statements
- Analysing the cost of operations
- Doing your business’s tax returns
- Giving general advice on financial decisions and their effect on the business
There is overlap but they are clearly different roles. Both roles take skill and diligence but have different functions.
Your tax accountant is particularly important to make sure you meet your tax obligations but don’t pay too much.
Why do you need both?
It is very valuable to a business to use both a bookkeeper and an accountant. For instance, the bookkeeper prepares and manages all the figures you will need to do your tax return and the accountant takes that information and does your return.
A good bookkeeper will make your accountant’s job easier and more efficient. Any time a bookkeeper can save for your accountant can be put towards getting you your best return and maximising profits.
Lots of small business bosses choose to do the bookkeeping themselves. While it may be fine at the very beginning, doing your own bookkeeping is a big task. The worst part is that it is very time consuming. Either you lose a lot of your valuable time to imputing and crunching numbers or you don’t get to it and you fall behind.
If you’re not experienced as a bookkeeper, you may also make errors which could cost you a lot of money (and you may never realise you are losing out).
The dangers of DIY tax
Yes, you can file your tax return yourself but should you? The best way to get the biggest return and pay the least tax is to use a professional accountant.
Doing your taxes and assessing your finances will be one part of your job. For an accountant, it is their entire job. They know everything about tax returns and finances.
When it comes to bookkeeper vs accountant, it isn’t a competition. Together, a bookkeeper and an accountant will help you to control your finances and get the best business results.
Make sure to work with qualified and registered professionals who you can trust and always be proactively involved with your business finances.
Looking for a reliable tax accountant? Contact Mobbs & Co now.