Bookkeeping Basics #2
Have you ever wondered if there is any difference between an accountant and a bookkeeper? The truth is, there are plenty of differences between accountants and bookkeepers; both serve a different purpose; both of which offer huge benefits to your business.
Let’s first answer the question: What is bookkeeping?
What do bookkeepers do? In simple terms, a bookkeeper will organise all the financial record-keeping that you don’t have the time, patience or knowledge to do properly. They can also provide insight into potential financial issues in the business. A good bookkeeper will be a huge asset! Some of the key roles of a bookkeeper include:
•Invoicing and Receipts
•Accounts payable and receivable
•Debt & Cash Flow Management
•Payroll, Payment Summaries & Superannuation
•Banking & Bank Reconciliations
•Financial Reporting & Analysis
If you are a small business owner, you shouldn’t be looking towards your accountant to provide small business bookkeeping services; as they are completely different to accounting services! You already have a lot to run and organise for your business, so engaging in bookkeeping services would be enormously helpful to your business. While it may seem to make sense to have your accountant do your bookkeeping for you, it’s important to remember the differences between these services. Here are three reasons why you should utilise specific bookkeeping services:
Reason #1: As a business owner it’s easy to think that your accountant may as well do your books as well. In reality, it is far more cost effective for your business to have a professional bookkeeper do your bookkeeping for you. This is because your accountant’s hourly fee will increase significantly (in some cases up to double) to include bookkeeping services. Additionally, many accounting firms don’t employ certified Pro-Advisors and therefore might refer your job to an outside firm that doesn’t really know your business.
Reason #2: Accountants and bookkeepers work well together! Your accountant’s job is to save you money in the area of income taxes and to prepare you for filing with the IRS. Your bookkeeper’s job is to help you manage your books on a consistent basis so that they can help you get organized and save you money when you submit your financial information to your accountant at the end of the year. A bookkeeper is preparing your books so that they are organized and functional for your business, and to assist you to make better informed business decisions throughout the year, as well as providing you with an ongoing snapshot of how your business is doing. These are very different goals which yield different results, but when put together can provide great value to your business.
Many bookkeepers will also practise double entry bookkeeping to minimize errors and increase the chance that your books will balance. (Double entry bookkeeping is so called because the process involves entering all transactions twice). This is just another method a bookkeeper will use to ensure that everything is done correctly and legally for your business.
Reason #3: A bookkeeper can help you to use bookkeeping software to grow your business. A Certified Pro-Advisor can make your Quickbooks experience fun, because you’ll be able to see all the benefits and where you’re making money! While your accountant focuses on what the IRS needs to know, your bookkeeper is focused on what YOU as the business owner needs to know in order to successfully run and grow your business.
In addition, the bookkeeping software available comes in many different formats and it can be difficult to know which is best for your business needs and circumstances. Your bookkeeper will be able to discuss your business with you, go through the bookkeeping basics so that you have a good understanding, answer for you some of the commonly asked questions such as "what is bookkeeping”, and make a recommendation as to which software will best serve your requirements. Some of the well-known software includes Xero bookkeeping and Xero Cashbook, MYOB Bookkeeping, QBO and Quickbooks Online Account.
It’s worth seeing the value that a bookkeeper can bring to your business and consider investing in bookkeeping services. Successful bookkeeping can help your business by ensuring that everything is done legally and correctly; but also that you’re saving money and ultimately making money.
If you’re still unsure about bookkeeping services or where to start, please don’t hesitate to get in touch with us; we’ll be happy to answer any bookkeeping questions you may have.
- The Shoebox Team
"Empowering Business Owners to Realise their Business Dreams”