What’s the difference between an accountant and a bookkeeper, and do you need both?
This is a question many business owners ask because they’re not clear on the difference between an accountant and a bookkeeper, and how they work together.
You need both because they serve different purposes. Think of these two as a waiter and a chef. Each person helps get the meal on the table at a restaurant. They need to work well together, but their skills are different.
Your accountant and bookkeeper are a team that will deliver you ‘chef’s kiss’ results when it comes to understanding your cash flow, identifying profit drivers and staying in control of your tax.
Here’s an outline of the roles these professionals play and their qualifications.
The difference between an accountant and a bookkeeper
First up, bookkeeping is about recording transactions. Whatever your business’s daily financial ins and outs, the bookkeeper is there to keep track of them all.
A bookkeeper’s daily workflow will include the following:
- Ensuring transactions are recorded accurately in your accounting system
- Managing payroll so your team is paid on time
- Creating invoices to send to clients
- Resolving paid invoices and chasing overdue ones
- Receiving invoices and paying suppliers on your behalf
- Preparing financial statements so you know where you stand in terms of cash flow
- Maintaining and balancing all accounts
When you have a skilled bookkeeper and use a reliable system such as Xero or MYOB, you should be able to see at a glance how much money your business owes, how much is owed to you and the amount you have in the bank, with real-time or very close to real-time accuracy.
On the other hand, an accountant’s function is about processing the financial data compiled by your bookkeeper. Rather than purely keeping records, your accountant helps you take care of reporting obligations, works with you to figure out how much tax you owe and helps you make more informed financial decisions.
An accountant might:
- Review financial statements
- Analyse the cost of operations
- Complete and file your BAS and tax return
- Identify strategies you can apply to minimise tax
- Help the business owner to uncover opportunities for growth
These professionals both play an essential role in your business success by saving you from financial confusion and helping you avoid unnecessary debt.
Strictly speaking, bookkeepers aren’t required to have any formal training or education. All the same, an experienced bookkeeper will have an eye for details and a broad understanding of financial topics. They will have a head for numbers and be a stickler for accuracy.
After you have spent some time attempting to do your own bookkeeping, you’ll realise it makes more sense to work with a certified professional who has completed formal training. This expert will be far more efficient and a great deal less likely to make mistakes.
The difference between an accountant and a bookkeeper is that most accountants will have a tertiary degree, either in accounting or a related financial field. Accountants also need to have accreditation and certifications to practice so always check if your accountant is registered.
The difference between an accountant and a bookkeeper: Two vital roles.
If you’re serious about growing your business, financial management is one of the first things to outsource. An accountant and bookkeeper will save you from the hours spent trying to figure things out yourself and ensure you have a clear picture of how you are tracking financially.
Your bookkeeper saves you time each week (or even every day) by overseeing your transactions and giving you a heads up if there is a concern. They also make life easier for your accountant by ensuring all your information is well presented when BAS and tax time roll around.
When the two work together, they can help you minimise cash flow ‘holes’ and identify smart ways to grow your business.
Take the stress out of managing your finances with the new Bookmates service from PTP.
We support small businesses from our offices in Shepparton, Cobram, Melbourne and Geelong but can work with you remotely, wherever you may be. Register for a free discovery call to discuss a bookkeeping package that’s fully personalised to your business and needs.