Bookkeeper VS Accountant - Which one is right for you?

Bookkeeping and accounting - do the two terms sound synonymous to you?

Do you often use the two of them interchangeably?

That remains a hot topic of discussion among businesses because there’s often a lot of confusion about it. Sometimes understanding the difference between the two can be tricky. For example, both bookkeepers and accountants work with your books of accounts. Still, there are some differences that every business owner needs to be aware of before deciding which one to hire.

Some of the questions that could be in your mind while hiring a virtual assistant bookkeeper could be;

How to know if my business needs an accountant or a bookkeeper?

Do I need one permanently, or can I hire them on contract?

Do I hire a virtual bookkeeper or an in-house one?

Do I only need a bookkeeper if I own a small-sized business?

This blog will help you understand the two roles in detail to help you choose the ideal fit for your business.

What does a Bookkeeper do?

Let us first understand the role and responsibilities of a bookkeeper. A bookkeeper is responsible for recording day-to-day financial transactions, updating a general ledger, and preparing trial balances for perusal by accountants.

They also maintain requisite documents for taxation compliance, monitor cash flow, and assist in preparing financial reports, which helps management make strategic decisions. Here are the most common responsibilities of a bookkeeper:

• Maintaining a balanced general ledger
• Preparing trial balance for the accountants
• Monitoring the variances from the projected budget
• Establishing different accounts
• Maintaining records of financial transactions
• Assist in the preparation of the financial reports by collecting, analyzing, and summarizing accounting information
• Developing a system to account for financial transactions by establishing a chart of accounts
  

There may be additional responsibilities based on the unique needs of your business. For example, a bookkeeper may be required to learn a specific accounting software system.

What does an Accountant do?

In contrast to a bookkeeper, an accountant may have to crunch the numbers given by the bookkeeper, but these are only a part of their skill set. It is vital to possess sharp logic skills and big-picture problem-solving abilities. In addition, accountants must use the small pieces of information put in place by the bookkeeper to draw much more significant and broader conclusions. Here are the most common responsibilities of an accountant:

• Preparing Income tax returns
• Conducting reviews of various company financial statements
• Performing accounts analysis
• Conducting routine audits to ensure that the company financial statements follow ethical standards.
• Preparing forecasts and what-if analysis
• Monitoring indirect taxation and preparation of returns
• Financial risk assessment associated with contracts
• Helping make business structure decisions like carving out provisions and reserves.

What is the difference between an Accountant and a Bookkeeper?

Bookkeepers and accountants are both professionals who work with financial data, but their roles differ in several ways. At a basic level, bookkeepers are responsible for recording daily financial transactions, maintaining your business's financial records, and producing financial reports, while accountants provide a higher level of financial analysis and advice.

Bookkeepers are responsible for recording financial transactions such as sales, purchases, and payments made by the company. They maintain accurate business's financial records, including the general ledger, accounts payable, and accounts receivable. Bookkeepers also reconcile bank accounts, manage payroll, and handle preparing financial statements such as income statements, balance sheets, and cash flow statements.

In contrast, accountants focus on analyzing financial data to provide insights and guidance to business owners. They often collaborate with bookkeepers to ensure financial records are accurate and complete. Accountants also handle more complex financial tasks such as creating budgets, forecasting financial trends, and analyzing financial data to help businesses make informed decisions.

Overall, while both bookkeepers and accountants deal with financial data, their roles differ in their level of responsibility and the depth of financial analysis they provide. Businesses need to determine which type of financial professional they need based on their unique financial needs and goals.

What are the similarities between an accountant and bookkeeper?

Despite their differences, bookkeepers and accountants share some similarities in their roles. Both professionals work with similar financial information, and their primary goal is to help businesses manage their finances effectively.

Bookkeepers and accountants both work with financial records to ensure that they are accurate and complete. They also collaborate to prepare financial statements, such as income statements, balance sheets, and cash flow statements. Both professionals also have a duty to maintain the confidentiality and privacy of financial data.

Moreover, both bookkeepers and accountants are essential in ensuring that businesses are compliant with tax laws and regulations. Bookkeepers ensure that financial records are complete and accurate, making it easier for accountants to prepare tax returns and identify potential tax deductions. Accountants use their expertise to navigate complex tax codes and ensure that businesses pay the correct amount of taxes.

In summary, while bookkeepers and accountants have different roles, they share many similarities in their approach to managing financial data. Both professionals work to ensure that businesses maintain accurate financial records, prepare financial statements, and comply with tax laws.

Bookkeepers vs Accountants: Job Description

Bookkeepers and accountants perform different tasks in the financial management of a business. Understanding the differences in their job descriptions can help business owners determine which professional to hire based on their specific needs.

Bookkeepers

Bookkeepers are responsible for recording and organizing financial transactions. Their primary responsibilities include -

• maintaining financial records,
• reconciling bank accounts,
• managing accounts payable and accounts receivable,
• and generating financial statements.

Bookkeepers must be detail-oriented, organized, and proficient in accounting software.

Accountants

Accountants, on the other hand, provide a higher level of financial analysis and advice. Their job responsibilities include -

• analyzing financial data to provide insights and recommendations to business owners,
• preparing tax returns,
• creating budgets and forecasts,
• and conducting audits.

Accountants must have excellent analytical skills, be detail-oriented, and have a thorough understanding of tax laws and regulations.

While bookkeepers and accountants share some similarities in their job descriptions, their primary responsibilities differ. Bookkeepers focus on recording and organizing financial transactions, while accountants provide financial analysis and advice to business owners. Both professionals work closely together to ensure accurate financial data and prepare financial statements.

Who is the right fit for my business: Bookkeeper or Accountant?

Now that we are clear on the roles of the bookkeeper and accountant let us return to our original question: who to hire.

The answer is that you need to hire a bookkeeper and an accountant for your business. Let us discuss this in the context of the size and type of your business:

1. If yours is a small business with a lower transaction volume: You should have both roles part-time. A regular bookkeeper can spend a few hours per week managing the transaction entries and ensuring that documentation is in place. You can hire an accountant for specific needs like audits and tax filing.
2. If your transaction volume is higher, you may need a full-time bookkeeper (one or more bookkeepers). Accountants can be hired on a retainer basis.
3. For larger businesses and enterprises, the transaction volume and complexity are higher. As a result, you need a team of bookkeepers and accountants to manage your accounts.

I am also often asked: Could we just have an accountant do the bookkeeping tasks? Well, that is not likely to be an optimal solution. Accountants are a lot more expensive. The bookkeeping hours required are much more than those required to file taxes or other accounting activities. It will escalate costs without delivering incremental benefits.

Further bookkeeping can be done remotely from offshore locations to drive down costs further. Virtual bookkeeping is an efficient, cost-saving solution for modern businesses that want to improve their operations without burning a hole in their budget. With virtual bookkeeping services like Wishup, you can get the quality of a full-time bookkeeper at only a fraction of the price.

When to hire a bookkeeper or accountant?

One of the most common questions small business owners ask is when to hire a bookkeeper or an accountant. While the answer depends on each business's unique financial management needs, here are some general guidelines to help you determine when to hire each professional:

When to hire a bookkeeper:

• When you have a high volume of financial transactions that need to be recorded and managed.
• When you need help with day-to-day financial tasks, such as invoicing, accounts payable, and accounts receivable.
• When you need to reconcile your bank accounts and ensure that your financial records are up to date and accurate.
• When you need to generate financial statements, such as balance sheets and income statements.

When to hire an accountant:

• When you need help with tax planning and preparation, including identifying potential tax deductions and minimizing your tax liability.
• When you need to create budgets and forecasts to help you make informed financial decisions.
• When you need help with financial analysis, including understanding your business's financial performance and identifying areas for improvement.
• When you need to conduct audits to ensure that your financial records are accurate and compliant with tax laws and regulations.

How to hire a bookkeeper or accountant?

Now that you know when to hire a bookkeeper or accountant, the next step is to determine how to hire one. Here are a few options:

Hire a virtual bookkeeper from Wishup:

One of the easiest and most convenient ways to hire a virtual bookkeeper is to work with a virtual assistance service like Wishup. Virtual bookkeepers can provide all of the same services as in-person bookkeepers but can work remotely, saving you time and money on office space and equipment. Wishup's virtual bookkeepers are highly trained and experienced in managing financial records and can help you keep your finances organized and up to date.

Use a staffing agency:

Another option is to work with a staffing agency that specializes in financial professionals. Staffing agencies can help you find qualified bookkeepers and accountants and handle the hiring process for you, saving you time and effort. Keep in mind that staffing agencies will charge a fee for their services, so be sure to factor this into your budget.

Post a job listing:

You can also post a job listing on online job boards or in local newspapers to find a bookkeeper or accountant. This option can be time-consuming, as you will need to sift through resumes and conduct interviews to find the right candidate. However, it can also be cost-effective, as you will have more control over the hiring process and can negotiate the terms of the job directly with the candidate.

Regardless of which option you choose, it's important to conduct a thorough screening process to ensure that the bookkeeper or accountant you hire has the necessary skills and experience to manage your finances effectively. Don't hesitate to ask for references or conduct background checks if necessary.

Benefits of outsourcing to Wishup's virtual bookkeepers

By hiring a virtual bookkeeper from Wishup, you can have access to many benefits, such as -

1. 24-hour onboarding: Wishup offers 24-hour onboarding for all clients, ensuring a seamless transition to working with a virtual bookkeeper. This means that you can start managing your finances more efficiently and effectively in no time.
2. In-house training on over 70 tools: Wishup's virtual bookkeepers are highly trained in using over 70 no-code tools, including popular accounting tools like QuickBooks, Xero, and FreshBooks, ensuring that they can provide expert support and advice on your finances.
3. Instant replacement: If your virtual bookkeeper is unavailable for any reason, Wishup offers instant replacement with another qualified professional, ensuring that your finances are always managed seamlessly.
4. Data security: Wishup takes data security seriously and has strict non-disclosure agreements (NDAs) in place to protect your sensitive financial information.
5. Dedicated account manager: Each client is assigned a dedicated account manager who oversees the bookkeeping process and ensures that your VA's work is on track.
6. 7-day money-back trial: Wishup offers a 7-day money-back trial for all new clients, giving you the chance to try out their services risk-free.

Make the smart choice for your business!

In conclusion, I would say that both of these roles are critical and judicious. Using a bookkeeper helps you bring efficiency to operations, increase accuracy in accounting and drive down your costs.

If you want to grow your business with our team of virtual bookkeeping assistants, click here to schedule a free consultation today, or drop us an email at [email protected]