Do You Need an Accountant or a Bookkeeper?
Many small business owners wonder how many people they need to hire to keep the company afloat. This eventually entails figuring out whether a bookkeeper or accountant needs to be hired to take care some of the small business accounting practices. While it is possible for the owner to take care of the responsibilities of these positions, that is not always the most prudent course of action to take. Here is what you need to know about the positions and when you need to hire one.
Do You Need a Bookkeeper?
Bookkeepers essentially track the daily business expenses and revenue. This person likely comes into the office every day and writes down all the transactions in a ledger. In the past, the ledger would have been a physical document, but these days, many types of software are available that allow bookkeepers to record all this information digitally. The materials that need to be recorded include client invoices, subsidiaries, debits, credits and any financial transactions. Everything needs to be written down, and it will help you substantially when it comes to pay your taxes.
Bookkeepers need to take highly accurate notes. Nothing can be left up to chance. For your small business accounting to be taken to the next level, it is even recommended that you, as the employer, look over the bookkeeper’s notes to ensure precision. However, an accountant can also double-check the person’s notes.
Do You Need an Accountant?
There are a few responsibilities that an accountant needs to complete. An accountant will assist you in preparing your income tax returns. He or she will also prepare financial statements, prepare adjusting entries, determine the impact of certain financial decisions and analyze the overall cost of operations. Accountants can also create forecasts to predict how well your company is going to do in the near future.
Accountants usually have more education and experience than bookkeepers. An easy way to think about it is that accountants are the next step above bookkeepers. While bookkeepers focus on the day-to-day transactions, accountants tend to look at the larger picture and will help you grow your business to its fullest potential.
In general, it is best to hire both for your business. Some business owners may decide to do all the bookkeeping themselves in order to cut back on costs, but make sure you understand what that entails before committing to it. By being smart with your money, you will have a firm grasp on your small business accounting, and your company will soar.