If you’re in Melbourne and planning on hiring someone to help manage the finances of your business, then you have probably found yourself wondering whether you need a bookkeeper or an accountant. What’s the difference, and which should you bring on board to help take care of your company?
What is a Bookkeeper?
Bookkeepers are responsible for the day-to-day tracking of the finances of your business.
A bookkeeper can help you with a lot of tasks, including processing invoices and receipts, keeping track of payments and running basic reports. The duties of a bookkeeper include:
- Processing payroll
- Processing receipts, payments and invoices
- Reconciling accounts
- Managing accounts payable and accounts receivable
- Establishing and reviewing your accounting systems
In essence, the job of a bookkeeper is to make sure that on a day-to-day basis your business is properly managed and that your financial records are in good shape.
What is an Accountant?
Accountants tend to handle more complex tasks, such as:
- Tax planning
- Tax advice
- Financial management
- Corporate reports and compliance advice
The things that an accountant deals with tend to be more sophisticated, analytical and advisory in nature.
While some accountants will ‘prepare your books for you’ the hourly rate charged by an accountant tends to be much higher, and it would be overkill to bring in an accountant to make sure that your monthly books were entered correctly.
Who to Hire and When?
Rather than thinking of the issue as “should I hire a bookkeeper or an accountant” treat it as “when is it best to hire each one”.
Most small businesses and medium-sized companies could benefit from having bookkeeping specialists that they work with on a regular basis, even if just to make sure that their ongoing financial reports are correct.
Accountants are useful for making sure that your end of year accounts are correct, and for offering advice, if you are thinking of borrowing or investing a large sum of money.
A good bookkeeper can save you a lot of money by ensuring that you are able to provide your accountant with ‘all of the facts’ ready to go.
Meanwhile, a good accountant can save you a lot of money by helping you to navigate the complexities of the tax system.
Not Better, Just Different
Both bookkeepers and accountants have an important role to play in helping businesses survive and thrive.
Unless you are formally trained in bookkeeping it is a good idea to have a bookkeeper on hand to help you with the practicalities of establishing your record-keeping systems, and also to check in from time to time to ensure that you are maintaining them properly.
A good bookkeeper could save you from some significant headaches in the long term.
Accountants can command significant salaries for doing tax returns for small business owners who have poor record-keeping systems.
Most accountants will have stories of getting a shoebox full of receipts dumped on their desk a few days before the tax return deadline, and a desperate business owner asking the accountant to help them make sense of the mess.
That’s a job an accountant can do, but it is not what their skills are designed for. Hiring a bookkeeper will save you from being in the position of paying a premium for ‘crisis accounts’.
Just remember that accountants are there for when you need help with complex issues. Whether that’s preparing projections or signing off on an audit.
In general, accountants charge higher fees, but smaller businesses tend to work with them less often, and if you have good records in place from day one then your accountant will find working with you much easier.
If you are looking for a blend of truly personal service and expertise, please call us today on 03 9510 2120 or contact us through our website.