What’s the difference between an accountant and a bookkeeper?
If there were a top 10 list of the most common words in business, accountant and bookkeeper would very likely be on it. While accountants and bookkeepers are often thought of as a single function, the reality is that there are significant differences between the two. More importantly, these differences matter to your business.
Simply put, bookkeepers handle your day-to-day books throughout the year. Bookkeepers perform common functions including maintaining the general ledger, invoicing, payroll processing, cash flow forecasting and budgeting. Accountants, meanwhile, take all the records prepared by the bookkeeper and compile external financial statements, file tax returns, ensure regulatory compliance and offer business and tax advice.
Bookkeepers focus on administrative and transactional activity. Accountants focus on the bigger picture, using the information prepared by bookkeepers to generate financial models, offer strategic tax planning and give business owners a deeper understanding of profitability, financial controls and other business activities.
“Bookkeepers and accountants provide business owners with the micro and macro financial insights they need to make better operational and strategic decisions.”
Bookkeepers and accountants complement each other and ensure you’re on top of the financial state of your business. The bottom line, says Amit Khanna, National Marketplace Lead, Deloitte Private, is that, “Together, bookkeepers and accountants provide business owners with the micro and macro financial insights they need to make better operational and strategic decisions.” The reality is, your business needs both.
While some businesses do manage to get by with one person who does a little of both functions, Wang recommends against it. “They need specialists, not generalists,” he says. “As a business owner, you really want the best of both worlds.”
This is particularly true for compliance and tax matters. Maintaining a detailed understanding of changing regulations and policies is almost a full-time job in itself. It’s better not to cut corners and to ensure you have an expert on your side. This is your money we’re talking about.
Set your business up for efficiency
It’s clear your business needs the functions of both a bookkeeper and an accountant, so the real question is: how do you make the most efficient use of both? After all, you want to focus on your business, not your books.
That’s where cloud-based financial collaboration solutions come in. Cloud technology offers a way for you to manage your day-to-day activities more efficiently, while streamlining the year-end functions you’ll need to prepare for as well. The big benefit of cloud solutions is that they automate and consolidate all the work bookkeepers and accountants normally do into one simple financial dashboard, which you can access in real time, any time.
That’s just the beginning of what cloud technology can do for businesses. “The real advantage of cloud-based solutions is that they can build on the basic services a small business requires with more advanced features as that business grows,” Wang says. “Some cloud solutions even come with advisory services, giving business owners access to insights they can use to grow or benchmark performance against their peers.”
No matter how you decide to handle your financials, make sure you have the resources in place to ensure the long-term success of your business.
Bookkeepers focus on:
Accountants focus on: