I have an accountant, why do I need a bookkeeper?
It's a common question – why do I need a bookkeeper if I already have an accountant? After all, both professionals handle financial transactions and keep track of your company's money. However, there are some key distinctions between the two roles that make bookkeeping an essential part of any business. Let’s take a look at their similarities and their differences.
Since these two both work on the financial side of the business, there’s going to be similarities:
Accounting knowledge is required
Both are detail-oriented and have strong mathematical skills
Both must be able to use accounting software programs
Must be tax-compliant and adhere to the generally accepted accounting principles
A bookkeeper handles the day-to-day recording of financial transactions while the accountant reviews the work of the bookkeeper and recommends the necessary actions or steps for any reconciliations and/or adjustments needed.
A bookkeeper ensures the completeness of the financial transactions in each period for the financial statement preparation, while the accountant ensures the accuracy and analyzes the financial data.
A bookkeeper focuses on the day-to-day financial transactions of your business, while an accountant provides more long-term strategic advice. This means that a bookkeeper is responsible for recording all income and expenses, maintaining accurate financial records, and preparing reports that show your company's financial health. In contrast, an accountant typically provides advice on tax planning, investment strategies, forecast, budget, business trends, and other financial matters.
A bookkeeper usually works on an hourly or project basis, while an accountant is typically a salaried employee. This means that bookkeepers can be hired to handle specific tasks or projects, such as setting up your accounting system or preparing monthly financial reports. On the other hand, accountants are typically considered full-time employees, which means they are paid a salary, regardless of the number of hours they work.
A bookkeeper is typically less expensive than an accountant since they do not require the same level of training and experience. This makes them a more affordable option for small businesses or startups that may not have the budget to hire a full-time accountant.
While both the bookkeeper and accountant play important roles in any business, the bookkeeper is typically more focused on the day-to-day financial transactions. This makes them an essential part of any business, as they can provide a valuable and immediate role in your company's financial health.
When to hire a bookkeeper
There's no one-size-fits-all answer to the question of when to hire a bookkeeper. The best time to do so depends on the specific needs of your business. If you're just starting out, you may not need to hire a bookkeeper right away. You can handle the accounting and bookkeeping yourself, at least until your business starts to grow.
As your business grows, you'll likely find that you have less and less time to devote to bookkeeping. At this point, it makes sense to hire a bookkeeper or accountant to take care of this important task for you. If you're already running a successful business, you may find that you need a bookkeeper sooner rather than later. This is especially true if your business is growing quickly and you're starting to feel stretched thin. A bookkeeper can take care of the day-to-day financial tasks of your business, freeing up your time to focus on other things.
No matter when you hire a bookkeeper, make sure to choose someone experienced and reputable. Ask for referrals from other businesses in your industry, and interview several candidates before making your final decision.