Great question. Businesses ponder this all too often. And the answer really is simple – it depends on what your business requires.
Businesses typically require the services of accountants because they can offer invaluable financial insights to help businesses flourish. However, the stability of any business is built upon a solid foundation of a proper record of accounts – knowing where, when, and how transactions occur and tracking payments, sales, and receipts are an important part of any business. These are the responsibilities of a bookkeeper.
With the advent of accounting software like QuickBooks, businesses can now perform some of the typical duties an accountant would. This, therefore, poses a dilemma: if I can use software like QuickBooks, why should I hire an accountant? Don’t I just need a bookkeeper? Our team at Sync Bookkeeping has put together some insights on whether you should hire an accountant or a bookkeeper. Below are areas of importance for you to consider when making this decision and hopefully they will shed some light on what is best for you and your company.
Stage of the business
The maturity of business is indicative of whether you need an accountant or bookkeeper. If your business is in its infancy then you should consider involving an accountant. Accountants can offer actionable advice on corporate structure platforms that could help lower payable taxes as well as offer valuable legal protection for your business. In this way, an accountant acts as your business diagnostician – identifying, evaluating, and recommending best practices.
Once the business is set up and experiencing growth, then it’s wise to hand over the responsibility of daily record-keeping to a professional bookkeeper. Comprehensive, real-time financial reporting of daily business activities is important for all business owners and, if done right, can provide important information about the health and prosperity of your business. In this way, a bookkeeper acts as a caretaker – monitoring, organizing, and preparing key documents.
Size of the business
As the maturity of your business is important when considering the services of an accountant or a bookkeeper, so to is the size of your business. For a startup that has opted to use cloud accounting services like QuickBooks, it is easier for the owner to generate the necessary financial records and then pass them along to an accountant to prepare quarterly reports. However, this arrangement can be problematic; if the records and reports are not in a sensible order it can make the accountant’s job more difficult than it has to be. In this case, having a bookkeeper organize all the necessary documentation can help ease this transition.
In the case of a small and established business, a bookkeeper will provide aged receivables and aged payables report, profit and loss statement as well as the balance sheet on a monthly basis keeping the owner and management informed. Here you can see the caretaker aspect of bookkeeping – monitoring and organizing business reports. These details, however, are not available from an accountant until the quarter end when the business activity statements (BAS) report is normally prepared.
Different businesses require different financial services. Some businesses need an accountant for financial guidance while other businesses need detailed records of transactions. Naturally, there are some areas of overlap between the functions of an accountant and those of a bookkeeper, but accountants are better engaged in income tax returns, advisory engagements, and complex financial reporting, while bookkeepers are better in issues to do with BAS reporting, payroll and basic tax reporting. So when choosing an accountant, understand what your business requires – there’s no sense in paying for a service you don’t need and stand little to gain from.
If you’re in doubt, go back to the diagnostician vs. caretaker analogy; accountants can offer comprehensive financial advice and provide long-term fiscal direction for your business while bookkeepers can ensure your daily business affairs are organized through diligent tracking and reporting.
And then there’s money. Cost is a major factor when choosing between an accountant and a bookkeeper. You will find accountants typically charge more per hour and year-end financial report services often come with a charge as well. On the other hand, you will find bookkeepers offer their services at a cheaper rate. While some accountants have assumed the services of bookkeeping and will charge a premium rate for these services, know they may lack some knowledge of traditional bookkeeping responsibilities. So if you’re thinking about exploring this route, just keep that in mind. If you have any questions or concerns about what services your business requires, reach out to our team and we’ll be happy to help!
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