Bookkeeping and accounting are necessary for all businesses, no matter their size, but some business owners struggle to tell the difference between the two. While bookkeepers and accountants share a common goal, they each help with a different area of a businesses financial health.
There are three main areas of the accounting process - transaction processing, compliance and advisory. Bookkeepers are responsible for transaction processing. Accountants are responsible for compliance and advisory work, although bookkeepers can advise you on improving your transaction processing aspects of your business. Without correct and accurate transaction processing, your accountant cannot provide you with accurate compliance or good advice. This displays the importance of encouraging a healthy relationship between your bookkeeper and accountant and determines the areas they each work in to avoid any crossover. So, let’s take a look at the difference in their roles and why they’re both important.
The Role Of A Bookkeeper
A bookkeeper is in charge of recording day-to-day business transactions. This can include working with your accounting package (i.e., Xero MYOB) to:
Your bookkeeper works with you to make sense of the numbers, for example assigning costs to specific clients.
The Benefits Of A Bookkeeper
Regular Contact
Business owners tend to be in more constant contact with their bookkeeper, as opposed to their accountant, as bookkeepers do their work consistently throughout the year. Accounting is done at the "end of the financial year" and advisory is done ad-hoc throughout the year or at a review period after your accounts have been completed. Depending on the size of your business, your bookkeeper may well do a little bit every day on your accounts.
Improved Efficiency
Bookkeepers are more aware of the time saving and process improving apps and add-ons that are available in the market than accountants simply because they are the ones doing the actual transaction processing work on a consistent basis.
The Role Of An Accountant
An accountant makes sense of financial information and produces financial reports and suggestions based on that information. This includes:
The Benefits Of An Accountant
Reducing Your Tax Bill
Tax regulations change regularly. Accountants stay up-to-date with these changes and can advise you on how they affect your business and how they can benefit you financially. A good accountant will help you utilise these changes to legally minimise
your tax bill.
Growing Your Business
Your accountant can be a great source of advice and act as a sounding board to aid your businesses growth. For your business to be a success, it’s important that you make the right financial decisions early on, and an accountant can help you make decisions that will benefit you in the long run.
At The Back Office Company, we believe that bookkeeping is a specialist area. The market is changing so quickly with new Xero and MYOB updates being released continuously. New process improving apps and other technology developments are arriving all the time, so the value of a good bookkeeper is only increasing. However, we don’t try to be both bookkeepers and accountants. Compliance and advisory that accountants engage in is specialist work that carries serious penalties and risk to your business if not done correctly so we leave that up to them.
As bookkeepers, we partner with your accountant to ensure the best results for your business across all three areas of transaction processing, compliance and advisory. Contact us today for a no-obligation consultation.
