Accountant and bookkeeper perform separate duties but both are equally important to help your organization succeed financially in the long term. Accountants provide comprehensive financial advice and tax help whereas, bookkeepers focus on maintaining day-to-day transaction documents.
The practice of recording, summarizing, analysing, advising, and reporting financial data for a business is known as accounting. Accounting work is often done by certified public accountants, or CPAs.
Whereas, bookkeeping includes maintaining all of business’s financial records, including daily transactions. Although a certification is not necessary, bookkeepers have the option to get one. The location of the person or their employer usually determines whether qualifications or licenses are needed.
Roles and Responsibility of Bookkeeper
Maintaining document of all financial transaction with perfect accuracy is the foundation of small-business bookkeeping. Bookkeepers have to be active in daily work to maintain all transaction accurately without missing anything.
Following are some duties that a bookkeeper needs to perform.
Recording transactions: All financial transactions that come into or go out of your business should be documented in the general ledger. It is a master document that displays the balances, debits, and credits for all of your financial accounts. The nature of that transaction may include a bill, purchase, or sale.
Reconciling bank statements: Bookkeeper’s assure that recorded transactions match with current month bank statement. This operation is done once a month.
Maintain chart of accounts: Bookkeepers arrange the accounts on a company’s chart of accounts, ensuring that the number of accounts is balanced. Inaccuracies in the chart of accounts setup can eventually compound into more serious problems.
Prepare important financial reports: Financial statements include profit and loss statements, balance sheet and statement of cash flows.
Handle accounts receivable and payable: Managing accounts receivable includes sending bills, setting up payment dates, ensuring clients pay on time, and following up on past-due payments. Managing accounts payable includes making sure that suppliers are paid.
Managing payroll: For managing payroll bookkeepers need to analyse time-sheets calculate deductions.
Roles and Responsibility of an Accountant
Accountants typically take a broader view, whereas bookkeepers are highly detail-oriented in their work. These are a few of the tasks they have to perform:
Preparing and filing tax returns: During tax season, accountants are quite important. Their knowledge guarantees that everything is submitted correctly and helps to reduce your tax liability, or the amount of business taxes you pay. Dealing with one reduces the likelihood that you may be the subject of an Internal Revenue Service audit due to a tax filing error.
Provide financial planning guidance: In the beginning stages of your company, accountants may assist you in selecting the ideal business structure, and they frequently serve as reliable advisors in the future. To gain their advice on financial planning and financial forecasts, it might even be worthwhile to involve them before you’ve completed developing your business plan.
Assist for applying business loan: Possessing an accountant can be beneficial when a lender has intricate queries regarding the overall financial performance of your firm, as they are well-versed in business matters. The terms and conditions, interest rates, and other details of any small business loan offer you receive might also be something they can advise you on.
After reading this you may be thinking you require a bookkeeper or an accountant? Now as we have seen the responsibilities of both so, the accountant and bookkeeper are equally important for the business. But hiring and training any of them is a time-consuming process so you can outsource bookkeeping to ease your workload.
Further, are few scenarios to get the better understanding when you need a bookkeeper or an accountant.
Need assistance for processing invoices and other documents: An accountant won’t take care of things like processing purchase invoices and claims for costs, sending out invoices, filing, and organizing your financial documentation. For this work you will need bookkeeper to follow up with clients to collect past-due payments.
Need help to file VAT tax returns: You should be able to get assistance with this from both your bookkeeper and accountant. Other responsibilities that both will be useful for are posting journal entries, administering the payroll and providing basic tax advice.
Need to prepare limited company accounts: Your accountant is the only one who can complete this duty for you. Additionally, your bookkeeper will not be qualified to prepare business strategies, cash flow predictions, file corporate tax reports, or compute your capital gains tax. An accountant should manage all of these.
Need specialist tax advice: Once again, your bookkeeper is not qualified to provide your clients with thoughtful and strategic tax advice; only an accountant with knowledge of tax laws and regulations is.
Conclusion:
Though they provide different functions, bookkeepers and accountants play important roles in society. Nevertheless, the jobs are becoming increasingly related as accounting software becomes more and more common.
A bookkeeper’s duties can be automated by accounting software, this does not mean that bookkeepers will not be needed. Online or offline, bookkeepers and accountants are always going to be essential in helping you set up your business accounts.
An accountant is more qualified and requires more experience than a bookkeeper because they will help you make financial decisions and recommend the best course of action for your company’s expansion. As your company expands, you might determine that you need both positions to keep up your finances, and that’s entirely acceptable.
Otherwise, through outsourced accounting service you can temporarily hire a bookkeeper or an accountant as per your task’s requirement. Corient Business Solutions provides accounting outsourcing services such as bookkeeping, VAT outsourcing, Year-End accounting, Payroll outsourcing and various other services.
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