You might think that bookkeepers and accountants are the same, but they aren’t. If you’re running your own business, you’re going to need to know the difference. They each bring different benefits but also have different drawbacks. If you want to know which of these options is right for your business, then keep reading. If you’re still studying, you can also check out the MDS CPA exam review.
Bookkeepers have traditionally been employees who keep records and record all your expenditures and other business information stored or “kept in the book”. Hence the name. However, modern bookmakers have had their duties expanded somewhat. They also probably don’t use traditional books anymore, and will use a range of popular computer software to help them with their tasks.
Their main aim is to keep track of all money coming into and leaving the business. Any expenditure or income should be recorded meticulously by your bookkeeper. Some smaller businesses might not need to hire stand-alone bookkeepers if all account details can be looked after by another member of staff (or yourself). This has become increasingly easy as some software suites can help quite a lot. However, for larger businesses, you may need to hire a bookkeeper as keeping track of all financial outgoings and incomings can be a full time job. While giving bookkeeping duties to other members of staff can work, a proper bookkeeper will be more experienced and quicker at getting the job done.
Bookkeepers can generally work in a range of different types of businesses. They record purchases and sales, as well as reconcile financial documents and store them (like bank statements). Your bookkeeper should also track accounts payable and receivable. That way you’ll know both how much you are owed and how much you owe.
Unlike accountants, bookkeepers don’t generally require a degree. They might earn around $40,000 a year.
To be an accountant, you’ll need a college degree. And it’s a much more advanced role. Accountants are generally paid by a company to review finances and give the management advice on strategic and operational decisions. While some tasks may overlap with a bookkeeper, it is considered a more advanced and senior position. Pay for a qualified accountant could be around $70,000.
Duties for an accountant include tax advice and planning, along with making financial projections over a business’s future. They will also make recommendations on where you should spend more money and where to cut back, to help the business grow or make the money it should be. Accountants are also qualified to handle your tax returns, which could be worth the money alone.
Which should you choose?
This questions will depend on a number of factors. Firstly, how big are you, and what can you afford? If you just need a bit of record keeping, you might want to do it yourself. If you need a bit more record keeping but no actual financial planning advice, then a bookkeeper could be the best option. For larger businesses or ones that need serious advice regarding their finances – an accountant should be considered.