New business owners (and even ones that have been operating for years) often make the mistake of confusing bookkeepers and accountants. The two job roles are definitely related, but their roles are very different. Understanding these differences can help you better understand your financial management.
Bookkeepers Manage Financial Data Information
The role of a bookkeeper is to record transitions on a daily basis and to make sure that records are maintained in a consistent and reliable manner. They make sure to record all of your business’ financial transactions, including all debits and credits, and also create invoices for any financial need. They also work hard to balance your ledges and complete payroll needs.
The methods they use to manage this include receipt tracking, spreadsheet software, and various online payroll methods. They don’t process the financial information, as such, but make sure that all information is accurate and detailed for accountants.
Accountants Manage That Information
Accountants take the information prepared by a bookkeeper and manage it on a more in-depth level. For example, they will prepare any important financial statements in order to give your company any idea of where its money is coming and going. They will analyze the debits and credits of your company, isolate where you are losing money, and help you make important business decisions.
While proper bookkeeping is a necessary part of accounting, many bookkeepers cannot properly perform accounting tasks. They typically lack the training to do so, which isn’t to denigrate their role or abilities. It’s just that accountants have been trained to fully understand financial flow while bookkeepers have been trained to keep that financial information arranged and presentable.
Deciding Which You Need
If you understand basic bookkeeping techniques and you run a small business, you may only need an accountant to help you make financial decisions. That said, bookkeepers still perform a crucial role even for business owners. Most won’t want to mess around with this kind of information, considering it busy work or are more interested in handling major business decisions.
That’s when a bookkeeper is so important. They will keep track of your financial information, make it easy to understand, and will help your accountants understand the ins and outs of your financial situation. Accountants greatly appreciate bookkeepers because they make their job a lot easier.
When it comes right down to it, it’s not a bad idea to hire at least one bookkeeper and accountant early on in your business life. Even if that makes your financial situation a little tighter for awhile, it can help take your attention off these matters and let you focus on more important business decisions, like new investment opportunities.