Staying on top of your finances is a significant part of being a successful business owner. Financial records must be accurate to contain the tools you require to make wise business decisions and healthy cash flow. As your business grows, more customers, employees, and suppliers join your venture. In such circumstances, keeping track of your finances by yourself gets pretty challenging.
When accounting and bookkeeping tasks get too hectic for you, it’s time to hire a professional. But do you need an accountant or bookkeeper? While there are some overlaps in their duties, there are differences between an accountant and a bookkeeper.
Here are the differences between an accountant and a bookkeeper to help you understand which one you need.
Accountant Vs. Bookkeeper
An accountant is responsible for interpreting and assessing a company’s financial records and maintaining them. An accountant is more professional and skillful than a bookkeeper, who handles cash transactions.
Generally, an accountant has a certified degree and is paid exceptionally better than a bookkeeper. Practically, a bookkeeper has to report to the accountant.
A bookkeeper doesn’t require any training sessions, but a bookkeeper’s job is of pivotal importance. The information gathered by a bookkeeper determines how an accountant will interpret a company’s financial records. Based on this collected information, the accountant advises the entrepreneur about tax issues and other financial operations.
Bookkeeping and its Functions
Bookkeeping is a component of accounting that deals with the systematic recording of financial activities. The essential purpose of documenting cash transactions in a business is to estimate income and expenditures at the end of the year. In every company, financial decisions are made according to the bookkeeping records. However, it only reflects the cash flow management of a company.
Bookkeepers are in charge of recording accurate financial records regularly, including the internal and external cash flow. They must be proficient with the financial books and reviewing accounts. It would be appropriate to say that accountants couldn’t provide comprehensive suggestions without a bookkeeper and their information. Bookkeepers are appointed with essential duties, and they might be held accountable in case of crises.
The duties of a bookkeeper include:
- A bookkeeper has to maintain financial records and create a backup if necessary.
- He is responsible for handling banking deposits.
- A bookkeeper has to consider government regulations before making any decision.
- A bookkeeper must verify the accuracy of financial information before forwarding it further.
Accounting and its Functions
Accounting is a systematic procedure that utilizes financial information the bookkeeper collects to make valuable monetary judgments to establish a business. Once an accountant wisely determines internal and external cash management, he must make crucial decisions about a company’s financial future.
Undoubtedly, accounting and bookkeeping are essential requirements of modern times. Entrepreneurs usually lack the financial wisdom to operate their finances, so they must hire professional accountants and bookkeepers. With easy access to incredible accounting services, companies prefer to utilize accounting software and virtual tools. Furthermore, it allows businesses to focus more on profitability and less on accounting affairs.
The primary duties of an accountant include:
- An accountant reviews the collected data and keeps it updated.
- An accountant generates standard business reports required by the IRS.
- He ensures that the entrepreneur is following current industry standards.
Some small businesses couldn’t afford to hire an official bookkeeper, so an accountant will fulfill the responsibilities of a bookkeeper, too.
Business financial records are accurately balanced by the bookkeepers and strategically filed by the accountant, contributing equally to the long-term success of a business. Some entrepreneurs learn to record their finances, while others appoint a professional for monetary purposes. Whether you hire a bookkeeper or an accountant, you must seek professional certification to show their commitment and accuracy towards their profession and duties.
Conclusion
In conclusion, managing finances is crucial for business success. Choosing between an accountant and a bookkeeper becomes vital as your venture grows. Accountants bring expertise in interpreting and assessing financial records, while bookkeepers handle daily transactions. Both are integral for accurate financial insights. Small businesses may opt for versatile accountants covering bookkeeping duties. Regardless, seeking certified professionals ensures commitment and accuracy, contributing significantly to long-term success.
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