At some point, small business owners will need help when it comes to managing the Accounting side of their business. Although many owners want to keep the records on their own, accounting and tax planning have become more complicated over time, and it takes you away from you being the innovator that you are. Also, many entrepreneurs who hire accounting help usually discover they weren’t doing as well on their own as they thought they were.
However, the challenge of finding the right person need not be puzzling, because bookkeepers and accountants offer different, yet equally important services. Your books measure the pulse of your business, and accurate record-keeping expands past basic cash expenses. The type of industry you are in, the level of expertise your business needs and your budget all need to be considered.
Industry: Does your business have a number of fixed assets or a large amount of inventory? How many employees do you have? Is your business operating in more than one state or country? The more complex the organization, the more important it is to make sure that you have the right person for the job and that company’s bookkeeper is supported by a good CPA who can provide advice as and if needed.
Level of detail: Are you looking for someone to be the go-to person for the day-to-day financial recordings like account reconciliations, paying your business bills, someone who submits and follows up on invoices sent, posts monies received, and maybe payroll and/or Human Resources? If so, you are probably going to be fine with a Bookkeeper.
A qualified, detailed Bookkeeper enters and tracks company expenses and records them correctly and retains documentation for all transactions so that the business is ready for tax time along with any other reporting needs. I am often called an Accountant, when I am actually a Full Charge Bookkeeper. However, don’t underestimate the value of a skilled, diligent Bookkeeper. Bookkeeping may seem easy, but if someone makes a mess of your books, it can cause trouble for years.
An accountant, on the other hand, can analyze the big picture of your financial situation and offer strategic advice. He or she produces key financial documents, maintains records of assets, liabilities, profit and loss and tax liabilities within your business and potentially others. They are also qualified to interpret data to prepare financial reports and statements for management.
Accountants can also file your taxes and serve as an outsourced chief financial officer, advising an entrepreneur on financial strategies, such as whether to secure a line of credit against receivables when introducing new products.
Budget: I have researched that Bookkeepers make between $15 and $50 per hour, whereas an Accountant will cost $50 up to $300. Whether you need someone daily or several times a year, it is a a good policy to have another set of eyes review your books. Having a good Bookkeeper in the office regularly and a qualified Accountant on retainer is a great partnership that keeps communication open and data strong.
So when you are up to your eyeballs in assets, credits and and normal balance accounts and want to return to being the innovator, consider hiring a Bookkeeper AND an Accountant. You’ll have peace of mind that the Accounting side of your business is being handled efficiently and you can go back to doing what you love.