Do You Need an Accountant, a Bookkeeper, or Both?

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by Advice Chaser
by Advice Chaser

One of the things small business owners dread most is doing the books. Keeping records, saving receipts, filing taxes—hardly anyone starts a business with the dream of doing these chores. Yet it can be hard to judge when exactly it’s time to hire a professional. Once you do decide you need help, who do you hire? A bookkeeper, an accountant, or both?

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What Can a Bookkeeper Do?

A bookkeeper is a professional who handles the day-to-day record keeping of your business. This can include payroll, accounts receivable and payable, all transactions in and out, and more. A good bookkeeper keeps your cashflow organized, so that you always know where the money is going in your business.

Because of the large amount of data they have to handle, a bookkeeper isn’t someone to meet with occasionally. You’ll need someone who works for you year round. In a new company, that person might just be you. You can keep your own books as long as the job is small enough to fit around the other work you do for your business. Later on, you might choose to have another employee manage it.

While a bookkeeper does not need to be certified, there are two designations that demonstrate a bookkeeper is well qualified for the job: the certified bookkeeping professional (CPB) or the certified bookkeeper (CB) designations. If you want someone experienced who can put your messy books in order, you can seek out someone with these qualifications.

If bookkeeping is too big a job for you and not yet big enough to need a professional bookkeeper, you might bridge the gap with bookkeeping software. QuickBooks and Xero are two popular options. But remember, someone still needs to enter the necessary information into the software. This can take a significant portion of an employee’s time.

What Accountants Do

While bookkeepers handle the day-to-day, accountants focus on the big picture. They keep track of your tax liability, analyze your cashflow, and draft profit-and-loss statements for you to present to investors.

Many small businesses do not have a full-time accountant. Instead, you might contract with an accountant at tax time or to produce an annual report. Later, you may find yourself hiring them as much as a few hours a week. Eventually, however, you will likely need a full-time accountant as your business grows.

Correct accounting takes significant expertise. You probably don’t know everything your business needs about taxes and legal requirements. An accountant can fill in these gaps with their own knowledge. A trained accountant will have either the certified professional accountant (CPA) designation or a degree in accounting.

Do You Need Both an Accountant and a Bookkeeper?

As your business grows, you will slowly add employees with the expertise you need in different fields. You move from wearing all the hats yourself to surrounding yourself with a skilled team, one step at a time. A common progression might run like this:

  1. You do all bookkeeping and accounting yourself.
  2. You do your own bookkeeping, but contract an accountant at tax time.
  3. An unskilled employee does the bookkeeping with the help of software, and an accountant still helps out from time to time.
  4. You hire a full-time bookkeeper and contract an accountant for a few hours a week or month.
  5. You have both a bookkeeper and an accountant on your full-time staff.

However, don’t feel bound to this order. If you’re excessively stressed with either the day-to-day recordkeeping or the large-scale tax implications of your business, it’s time to get help. There are options for every price point, from software to short-term contracting to hiring a full-time expert. But whatever you do, don’t hold off on getting help while your books devolve into chaos. That could end up becoming much more expensive for your business in the long run.

Find the Right Experts

Every business needs to surround itself with the right experts. You might find these professionals through personal connections, job postings, or online networking. Advice Chaser is another source for finding financial professionals for your business. Once we know your needs, we can connect you with qualified and experienced professionals. Contact us today to start the process.

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