Many people use the terms bookkeeper and accountant interchangeably. But is there a difference and as a small business owner do you need to have BOTH a bookkeeper and an accountant? The simple answer is YES!
A bookkeeper records your day to day financial transactions such as your purchases and payments to suppliers as well as sales and receipt of payments from customers. Recording these transactions can be done using an accounting system such as QuickBooks or in some cases manually using a paper system (not recommended!). The result is a ledger which contains raw data about your business transactions.
The accountant’s role is to verify the data entered by the bookkeeper. Once the accuracy of the data has been verified, the accountant then uses that data to generate reports, analyze the various accounts, perform audits and prepare financial reporting records like tax returns, income statements and balance sheets. An accountant’s analysis of the financial information can provide information for forecasts, business trends, opportunity for growth and when to restrict spending to manage cash flow. The accountant looks at the big picture and translates your financial data into a story of your business’ financial health.
Regardless of where you are in your business’ life cycle (just starting out or in operations for several years), it is critical for ongoing success to ensure the financial accuracy of daily transactions and that as a business owner that you use that data to make decisions for the future of your business.
Many small businesses and entrepreneurs take a “do-it-yourself” approach to finances. However, as your business grows and you begin to contemplate whether you should hire a financial professional, consider the following:
• How are you currently recording your financial transactions? Are you using a spreadsheet, pen and paper or some type of do-it-yourself bookkeeping system? Is the system that you are using today meeting your current business needs and will it be able to meet your future business needs? If not, and you are ready to select a different tool/method, do you have the expertise to determine the best system for your business?
• How much time are you spending on your bookkeeping function and how accurate is your financial data? Can your time be better spent meeting client demands? Does it make sense to outsource your bookkeeping function?
• If you prefer to do your own bookkeeping (possibly to save costs), can you benefit from the expertise of an accountant to review your transaction data and ensure that it is accurate and organized and prepare financial statements that can be provided to lenders/investors or to monitor the financial health of your business?
• How organized and readily available is your financial data at tax time? Could you possibly reduce the time and effort that your tax preparer expends each year to be able to complete your tax return?
Please contact us at info@WhiteheadBusinessSolutions.com or 214-236-8376 to schedule a complimentary consultation so that we can learn more about your business and your goals and assist you with determining how we can partner with you to better manage the financial health of your business.