Bookkeepers and accountants both play an essential role in managing your finances. Most businesses utilise both because, while they serve many similar functions, they also have some main 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 the information to prepare tax documents. Some tasks of bookkeepers include:
• Managing accounting systems (general ledgers, historical accounts)
• Processing invoices, receipts, payments and other financial transactions
• Managing payroll and employee records
• Preparing financial statements
• Reconciling accounts and preparing reconciliation reports (including reporting any irregularities in data to the management)
• Managing any loans or debt repayments
• Calculating GST
• Preparing and lodging your BAS statement
Bookkeepers tend to work for small to medium businesses. They look after the day to day running of 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 the 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. The Kangan Institute explains it best:
Accounting can be defined as the action or process of recording, sorting, storing, summarising, retrieving and presenting financial transactions in a manner that can help a business or any other commercial establishment make informed decisions. The accounting process may include the following:
• Preparing and adjusting entries (searching for and recording transactions that were not recorded in the books).
• Carrying out the analysis of the operational costs of the establishment
• Preparing the financial statements of the business
• Completing tax returns including income tax returns
• Helping the business owner to understand the impact of financial decisions
Accountants put together the financial indicators of a business. The main aim of accounting is therefore to deliver a better understanding of a firm’s profitability as well as the awareness of cash flow. It uses the information provided by bookkeepers in the ledgers. Accountants also help business owners with financial forecasting, strategic tax planning as well as tax filing.
Advantages of having them in one place
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.
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.
It surely makes more business sense to have your bookkeeper and accountant working together than in competition with each other. Collaboration and the continued development of strategic alliances between accountants and bookkeepers is the way of the future.