When it comes to managing your business’ finances, you might wonder whether you need a bookkeeper or an accountant. Both professionals can help you keep track of your money, but there are some key differences between the two. Let’s explore the two roles and then help you determine which one is right for your company.
Differences Between a Bookkeeper and Accountant
Overall, a bookkeeper handles the day-to-day finances of the business. He or she organizes and categorizes these daily financial transactions for easy understanding. The bookkeeper also reconciles the accounts to ensure that they are accurate. Accountants, on the other hand, prepare detailed financial reports based on the bookkeepers’ records, enabling them to be efficient at their job.
Here are more key differences between the two financial roles:
· A bookkeeper records your business’ purchases, receipts, sales, and payments, while an accountant interprets the data and tells you what it means for your business.
· A bookkeeper helps you prepare your books for tax purposes and then gives the books to the accountant who completes and files your taxes.
· A bookkeeper may manage your company’s payroll whereas an accountant does not, typically, offer this service.
· A bookkeeper can provide some financial analysis such as letting you know about cash flow issues. An accountant provides more detailed financial analysis and gives advice on business expansion and investment decisions.
In addition, bookkeepers tend to charge lower fees than accountants do. This is because bookkeepers, typically, do not have the same level of education as accountants. However, some bookkeepers may earn a bachelor’s degree in accounting but choose a career in bookkeeping.
Choosing the Role Right for Your Business
So now that you are aware of the main differences between a bookkeeper and an accountant, how do you know which service you need? If you're a start-up company, you might be able to get by with just a bookkeeper. But if you're looking for someone to help you with your long-term financial planning, an accountant may be better suited for you. Many businesses hire both, a bookkeeper to keep track of day-to-day financial activities and an accountant to provide analysis and advice on financial planning and decision-making. The advantage of having both is that you won’t have to do the daily financial tracking that’s needed for an accountant to effectively do his or her job. Instead, you can outsource your bookkeeping, so you’ll have more time to focus on business operations and expansion.
Overall, the bookkeeper and the accountant play different but complementary roles in the financial operations of a business. If you would like to explore what type of role is best for your company, call us today at 203-641-7678 (Hamden, CT).