Outsourcing tasks for different areas of your business can be beneficial, especially when you're not well-versed in doing such things. Countless professionals and trained individuals are ready to offer their services to small businesses. But before hiring one, assess your business first. Which professional would be most helpful for your business?
When it comes to finances, you can get a bookkeeper or an accountant to help you. Does it make a difference when you hire the other professional over the other? Can they perform the tasks your business requires?
If you're thinking about hiring someone, you've come to the right place. We'll list the different responsibilities of bookkeepers and accountants so that you can hire the proper help for your growing business.
What Is The Difference Between Accounting and Bookkeeping?
Hiring a trained professional to help you manage your business means allocating resources to pay them. But, of course, you want your hard-earned money to be worthy of the service you are getting. So let's look at the different responsibilities of accountants and bookkeepers to help you differentiate their tasks.
Key Responsibilities of Bookkeepers
Certified bookkeepers do need a formal accounting degree to perform their job. However, bookkeepers are trained and do not need state-mandated exams and certifications to do their job. On average, a bookkeeper’s rate starts at $30 per hour.
Here are the responsibilities bookkeepers carry out.
Managing daily cash flow
Whether cash flow comes in plenty or slows down, keeping track of everything that comes in and out of your business is a way of telling if your business is doing good. Part of a bookkeeper's job is recording transactions in sales and expenses that happen in your business.
Modern technology means automated bookkeeping software, making it easier for bookkeepers to record your data. Moreover, bookkeeping software instantly produces summaries of your transactions whether you want data monthly, quarterly or annually.
Handling accounts payable and receivables
It's common for small businesses to have suppliers instead of producing their own goods. Of course, you need to pay the suppliers for the goods they manufacture for you. You can work with several suppliers if your company sells a variety of goods. It's the bookkeeper's duty to make payments to your suppliers. They can also make payments on behalf of your business for other necessary expenses.
In addition, as they make payments for your business, they are in charge of the collection. They send invoices to your clients to ensure all payments are done on time. They also record if payments and receivables come in late to ensure that your sheets remain balanced.
Preparing all the business’s financial statements
Businesses produce several financial statements. The data on these statements can tell if your business is stable or on the verge of failing. Bookkeepers prepare these financial statements for accounts to analyze.
Balance sheets, cash flow statements, income statements, and statements of equity are a few crucial financial documents that bookkeepers offer.
A bookkeeper's service may vary, and it can include processing payroll. For small businesses, bookkeepers can perform some duties of the HR department. For example, they can assist in processing paychecks and ensure employees get their pay accurately and on time.
Key Responsibilities of Accountants
A certified public accountant goes through a rigorous accounting degree and must pass state-mandated licensure examinations before they can offer their services. A certified accountant's average rate is between $50-$100. It can go higher depending on their work experience.
Here are a few of the major duties held by qualified accountants in small businesses.
Ensuring the data on financial records are valid
It's the accountant's role to make sure all data in the business's financial records are valid and accurate. Accountants are in charge of tracking any inconsistencies in the statements and pinpointing any problems. They will also be in charge of consulting with a bookkeeper when they see these inconsistencies.
Once everything is verified, accountants will be the one to answer if auditors check on your business. They also present these statements to stakeholders and potential investors to help with your business’s growth.
Ensuring that your business complies with tax laws
If bookkeepers record the cash flow in a business, the accountant makes sure you pay up correctly—especially taxes. Taxation is an important part of business, and you must comply with tax laws to run your business legally and smoothly.
Accountants are in charge of filing all tax returns for your business. Tax filing is done quarterly or annually, depending on the rule of your country's tax collection agency. Accountants ensure that you file and declare taxes on time so you won't have to pay fines and other unnecessary expenses.
Forecasting and risk assessment
An accountant can examine your business’s financial records to make an informed guess or forecast your business’s future. Aside from your records, there are other methods accountants can do to predict the direction of your business. For example, the market research method uses how many people are potential buyers when a product is launched. This information can help you significantly enhance your sales.
Other forecasting methods may include factors like GDP, economic factors, trending, and data models, which can be used for long term forecasts. Furthermore, accountants can help you plan your business's next step. Risk assessment allows you to see if your actions will benefit your business growth.
Many small business owners tend to go big and be reckless with their decisions, causing failure. Accountants will be able to strategize with you along the way so your business resources won’t go to waste. Their financial advice will help you allocate your resources to the right department.
Budgeting and cost accounting
Small businesses strive to make their processes more efficient to lessen their expenses. Budgeting within the business process is also in the job description of an accountant. They can pinpoint the areas of your business with unnecessary expenses which they think you can lessen.
Accountants can help you save money and allocate them to the other areas of your business you can improve on.
The difference between bookkeeping and accounting may be hard to spot as they both focus on the financial aspect of the business. But, to simplify, you can look at bookkeepers as individuals that keep all financial transactions in an organized record. In comparison, accountants are the ones to analyze and interpret the data.
So which one is better for a small business? As you start, bookkeeping will be easier for you to handle. In fact, you can attend training to be a certified bookkeeper. You can meet with accountants once in a while to help you manage your financial data. As your business grows and more cash flows into your company, then it may be a good time to hire both.
For trusted bookkeepers and professional accountants, book a call with Unloop and talk to our professionals. We offer many different accounting services that fit a small business’s budget.