You’ve started your own business, it’s starting to grow and you’ve quickly realized that you need help with your business finances. But do you hire an accountant or a bookkeeper? What’s the difference? Is there a difference?
Although these roles share common goals, they support very different things when it comes to the accounting process.
Let’s break down the process.
What does a bookkeeper do?
A bookkeeper is responsible for recording your day-to-day business transactions. This includes sales, purchases, receipts, and payments. They will also process invoices, reconcile accounts, and calculate GST. The details of every business transaction are recorded in a software program like Quickbooks (for example) and will be used by your accountant later.
What does an accountant do?
The accountant is responsible for the bigger picture. They take the data entered by a bookkeeper, verify it, and use that data to generate financial reports, perform audits, and generate forecasts. They are generally more expensive than a bookkeeper but are additionally qualified to advise or assist with taxes, audits, corporate reporting and compliance, and other financial management tasks.
Do I need a bookkeeper or an accountant?
This depends on your business needs. You may need both or you may need one or the other. It is important to understand whether you need to hire a bookkeeper or an accountant. Ideally, you should have both a bookkeeper and an accountant for your business and they should work together. Your bookkeeper keeps your records in order which will affect how the accountant will report and consult on your business.
But it’s very common for a business owner to only consult with their accounts at the end of every year. If you find yourself wanting to get financial advice or want to talk to your accountant regularly, then hire an accountant. If you are spending more time organizing your books than spending time on other tasks, then it’s probably best to get a bookkeeper and save yourself some time.
At the end of the day, whatever you decide to do, just make sure you have someone who knows what they are doing.
Dayna Holland, CPA, CA (she/her)
CEO of Dayna Holland Ltd.
Are you a small business owner or self-employed and wanting to improve your bookkeeping habits so that you can get ahead in 2021? Be sure to check out this blog post for my top three recommendations based on conversations I’ve had this year with entrepreneurs.
Click here to learn more about Dayna Holland, CPA, CA.