Does your business need an Accountant or a Bookkeeper and what is the difference? The type of business you have and the type of financial information you want will determine whether it’s a bookkeeper you require or an accountant.
A bookkeeper keeps your books they enter all your financial information into your accounting system, they can pay your bills, and create your sales information. Bookkeepers record your day to day transactional information. Bookkeepers generate data about your organization.
Accountants set your financial system up they determine your chart of accounts and set up the procedures for compiling your daily transactions. Accountants create the system that bookkeepers will use to process the day to day transactions. Accountants look at the big picture they create the structure, they tell bookkeepers how to process information and then they make sense of all the data collected.
In large organizations there is usually a department headed by an accountant with one or more bookkeepers to process the data. Small businesses generally rely on a bookkeeper or in some cases do the bookkeeping themselves. There are small business accounting programs that can help the bookkeeper process the data in a proper financial format. Having a year-end accountant to review the data will help in ensuring the data is being properly processed.
When hiring someone to process the daily transactions understanding the level of skill you need is helpful in finding the right person. Hiring a bookkeeper when you need an accountant will likely cause you more grief than the savings you realize in their weekly salary. Accountants cost more than bookkeepers because accountants are required to have a higher level of education and experience than what is required for a bookkeeper.
Hiring an accountant when you require a bookkeeper will cost you more. When you are not sure whether you need an accountant or a bookkeeper first determine the level of financial information you require. Do you need someone to analyze your financial information, set up your accounting system, create financial processes, do you require these skills on an ongoing basis or temporarily, or do you require someone to process the daily transactions? These questions will help determine the level of skill required.
In addition to skill level you must also have a budget for an accountant or bookkeeper. You may be able to hire a part time accountant for what it costs for a fulltime bookkeeper. Generally there are options for accountants that work on contract and this may be an option for your business. Understanding the work flow and the number of transactions to be processed daily will help you understand the time commitment and the level of skill your business requires. When in doubt do some research or talk to an accountant to get some advice on what you need.