A lot of people seem unsure of the differences between a bookkeeper and an accountant, using the two terms interchangeably. There are distinct differences between who a bookkeeper and an accountant are and the roles that they play in your business.
What a Bookkeeper Can Do For You
Think of a bookkeeper as someone who can help take care of the day-to-day finances of your company. They are trained in bookkeeping and business financials so they know the proper way to manage the finances of your company to stay in compliance with the CRA and other governing bodies.
A bookkeeper can take care of your accounts receivable and payables, cutting customer invoices and making sure they are paid and processing vendor invoices and making sure they are paid. For a lot of small business owners, processing credit card statements and making sure all of the expenditures are correctly categorized is something they don’t have time to do – a bookkeeper can take care of this for you, too.
Payroll is another area where a bookkeeper can really help a small business. Payroll can be a tricky thing to manage, especially for someone who isn’t familiar with all of the intricacies. With all of the deductions, regulations and taxes there are a lot of things to keep in mind – bookkeepers are trained in payroll and can make sure you stay in full compliance.
In the initial phases of a business you’ll probably only need a bookkeeper for a few hours a week as there won’t be a sufficient volume of transactions to warrant any more. The cost won’t be overwhelming but it will free up some of your time so you can focus on more important things.
What an Accountant Can Do For You
An accountant typically takes over where a bookkeeper leaves off and works at a more strategic level with the business management.
An accountant is responsible for finalizing year-end financial statements and submitting them to the CRA – this is something a bookkeeper is not qualified to do. As part of finalizing year-end statements, an accountant will make adjusting entries such as depreciation on equipment, prorated wages and allowances for uncollectible accounts. Since the accountant generally works from a backup of the company books they will provide a list of adjusting entries back to the bookkeeper to be made in the live copy of the books so the live copy and filed copy match perfectly.
An accountant also advises on financial strategies for the business and personal financial strategies for the business ownership. This might include things like understanding the financial implications of making a large capital purchase or selling some of the company’s assets, issuing dividends to the shareholders in the most tax-efficient way and ensuring that the business has sufficient cashflow to support upcoming operations.
Typically an accountant is less involved with the hands on financial operation of the business and is only consulted a few times per year.
So Do You Need an Accountant or a Bookkeeper?
Back to the question posed at the beginning of this post: Do you need an accountant or a bookkeeper in your business? The answer is that there is room for both.
Consider the analogy of an architect and a carpenter when building a house – both play different but important roles in building the house. In your business a bookkeeper can help take care of the day-to-day finances whereas an accountant takes care of preparing your books for year-end submission to CRA and providing high-level strategic advice to the business management and ownership.
Simply Bookkeeping provides a wide range of bookkeeping services at competitive prices. Please visit our website at www.simplybookkeeping1.com to learn more about us and the services that we offer. If you’d like to get in touch to see what value we can bring to your business, please call Michele Hyde at (647) 668 – 9363 or email her at firstname.lastname@example.org.