It’s common to confuse the role of a bookkeeper and that of an accountant. They both, after all, offer critical support for the financial health of a business and share similar goals. While both play essential roles, they focus on different details and processes. Bookkeepers are responsible for the initial stages in the financial cycle, involving record keeping, whereas accountants play a more subjective and analytical role, providing insights on the information compiled during bookkeeping.
Let’s dig into some of the main differences between bookkeepers and accountants, as well as tips for deciding to manage bookkeeping and accounting in-house or to outsource.
What Bookkeepers Do
Bookkeeping is the systematic recording and organization of a company’s financial transactions. The functions of a bookkeeper are often complicated but essential because they provide a clear and accurate picture of a business’ finances.
The main responsibilities of a bookkeeper include:
- Maintaining the general ledger
- Tracking income and expenses
- Managing bank reconciliations
- Tracking accounts receivable and payable
- Providing financial statements
- Completing payroll
Learn more about the importance of bookkeeping here.
What Accountants Do
Accountants use the information compiled in the bookkeeping process to produce financial models, prepare financial statements, and analyze cost of operations. An accountant is usually a CPA (Certified Public Accountant) who can complete income tax returns and help plan for tax season. Without accurate bookkeeping, however, accountants can’t properly perform their role.
The main responsibilities of an accountant include:
- Auditing financial documents
- Analyzing cost of operations
- Preparing financial statements
- Completing income tax returns
- Providing business executives with an understanding of the impact of financial decisions
Learn more about the role of a small business accountant here.
Managing Bookkeeping and Accounting For Your Business
Bookkeeping and accounting are vital but tedious tasks. Given the time-consuming nature of managing a business’ finances, many businesses (especially new and small businesses) outsource these services. However, there are business owners who choose to manage bookkeeping and accounting tasks in-house or even themselves.
Managing Business Finances In-House
If you have the time and desire to manage your business’ finances in-house, you certainly can. For some business owners, it makes more sense for them to do it themselves—they have the most intimate knowledge of their business. Those who own part-time businesses, especially, may not feel it’s worth it to pay someone else to perform bookkeeping and accounting tasks.
Before committing to managing your own business’ finances, however, be sure to compare the cost of a do-it-yourself accounting software (and your time) against the cost of outsourcing.
Another factor to consider is whether you, the business owner, actually have the expertise necessary to maintain financial health for your business. Navigating the tasks involved and making sense of them can be overwhelming. It’s easy to misunderstand the data you’re looking at without the experience or knowledge of a professional.
When It’s Time to Outsource
There are an abundance of reasons it might be time for you to outsource, whether it’s assistance with driving growth or if you’re just struggling to keep up with these tasks on your own.
Outsourcing bookkeeping and accounting tasks comes with a ton of benefits, like improving data security, increasing valuation, and saving time. Regardless of how in-tune you are with your business, financial guidance makes it significantly easier to discern the best next steps to meet your specific and unique goals.
If you own a new or small business, it doesn’t necessarily make sense to hire a full-time accountant, which will cost you. That doesn’t mean, however, you have to do it all on your own. Bookkeeping and accounting are challenging skill sets to learn, and it’s important that your business’ books and accounting are done right so you can make smart decisions and grow healthfully.
Leveraging an Online Bookkeeping and Accounting Software
Using a comprehensive software solution like ScaleFactor, that offers both bookkeeping and accounting and is backed by a support team of CPAs, ensures your business’ finances are handled correctly. It saves you time over a do-it-yourself solution and reduces the overhead cost of hiring a CPA. Rather than relying on multiple people or keeping data siloed in different places, ScaleFactor organizes all of your information in one place, while also providing useful insights and taking care of the day-to-day tasks of a bookkeeper or accountant.
Request a demo to learn more about ScaleFactor’s capabilities and how your business might best leverage them.