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Bookkeeping and accounting are both essential functions when it comes to managing your finances. Most businesses utilise both because, while there is some overlap between the two, they also have some crucial differences. They work in different stages of the financial cycle. In very simple terms, bookkeepers record business data and accountants analyse the data.
The focus of the bookkeeper is to record and organise the financial transactions of a business and to use that information to prepare tax documents. Some tasks of bookkeepers include:
Bookkeepers tend to work for small to medium businesses. They look after the day to day running of your business.
Still confused about what a bookkeeper does? Read our blog about how a bookkeeper can help your business.
While bookkeepers record the financial transactions of a business, the accountant ensures the figures are correct, prepares and interprets reports, and ensures that all ATO compliance requirements are being met.
There is some overlap between the two jobs, but where bookkeepers deal with the basics, accountants take everything to a much higher level.
Accounting involves the systematic tracking and organisation of financial transactions. Accountants provide businesses with valuable insights that support informed decision-making. Typically, an accountant will perform various tasks such as:
By analysing the financial data collected by bookkeepers, accountants play a crucial role in helping businesses gauge profitability and manage cash flow. Beyond this, they also offer financial projections, tax strategy advice, and ensure accurate tax filings. The ultimate purpose of accounting is to provide a clear picture of a company’s financial performance and empower better financial planning.
Bookkeepers and accountants both play an important role in your business. Having your bookkeeper and accountant under the same roof makes a lot of business sense.
Your bookkeeper and accountant can work together to ensure all of your financial obligations run smoothly. Although there is some overlap in the work they do, bookkeepers and accountants are likely to charge considerably different fees, so it makes sense for the bookkeeper to do the work where there is overlap. When they work in the same company, this can be managed far more easily than trying to juggle between people in different places. They can set clear boundaries so there is no overlap or duplication. This will save you from both having to deal with the hassle of demarcation squabbles and the time trying to sort things out.
Your travel time for appointments is reduced because you don’t have to take documents from one place to another. You also save time relaying messages on the phone or by email because your accountant and bookkeeper can easily speak to each other. In this scenario, you are the middle man between the two. When your bookkeeper and accountant work at the same firm, they can coordinate directly with each other.
Looking for a bookkeeper or accountant to help manage your finances? Our experienced and certified bookkeepers can help. Give us a call at 1300 728 875 or fill out a contact form to get started.
Having both in the same company means they are most probably also using the same software. When the accountant receives the financial information from your bookkeeper, the data will not need to be converted to use in another programme. When they save time, you save money.
One of the advantages of having a bookkeeper and accountant under one umbrella like this is that it provides better support to the business owner. For example, when a business owner is looking for details on finances and the accountant is not available, the bookkeeper can step in and go through their records, or vice versa. This means when one is out of the office, on holidays, or unavailable, there is still support available from the other that has access to all the files, transactions and details that are on record.
Additionally, your bookkeeper has access to taxation expertise if required, and your accountant has quick access to your bookkeeper should any queries arise.
Two eyes are better than one when it comes to finances. The more people working together provides increased checks and better protection against errors. By having accounting and bookkeeping services at the one firm, a business owner gets this added benefit, as well as the protection that comes from the removal of disconnects in the communication between the two. Accounting author, Brian Tankersley, describes it as the relationship between a doctor and a nurse. By having the doctor work directly with the nurse in the same room, the risk of communication breakdown and errors is dramatically reduced. He describes the working relationship saying,
“The doctor sees you for a short period of time and is involved in big decisions, but the nurse is there, day in and day out, making sure things happen the way they are supposed to … The bookkeeper makes the accountant’s work possible by getting the transactions recorded in the ledgers. The accountant analyzes, adjusts, summarizes, and reports the data in the ledgers.”
In the medical sphere, it is estimated that 25-40% of hospital errors are made from poor handover communication, when there are breakdowns between shifts and doctors and nurses not working together. This reflects the importance of having roles that are so closely linked working together under the same roof, like that of an accountant and bookkeeper working at the same firm.
These benefits are crucial to promoting the success of any business’s financial dealings. If you’d like to know more about the benefits you can receive by having your accounting, bookkeeping and taxation services all at one firm, contact us today.
Still not clear on what a bookkeeper is or if you need one? Here’s our beginners’ guide to all things bookkeeping for small businesses.
