A Bookkeeper and an Accountant each have a role to play in keeping your business’s finances in order. Bookkeepers are responsible for recording a company’s financial transactions, including sales, purchases, receipts, and payments.
Accountants then use this information to prepare financial statements, advise on tax matters and provide other financial advice.
When it comes to managing your finances, you have a few different options. You can do everything yourself, hire a bookkeeper, or hire an accountant. But what’s the difference between a bookkeeper and an accountant? And which one should you hire for your business?
Let's start by defining Bookkeeping and Accounting
Bookkeeping is the process of recording and organizing your financial transactions. This includes tracking your income and expenses, recording your sales and purchases, and keeping track of your assets and liabilities.
Accounting is analyzing, interpreting, and reporting your financial data.
This includes creating financial statements, preparing tax returns, and identifying ways to improve your financial health.
Having a good handle on your finances is essential as a business owner. This is where a bookkeeper can come in handy. Bookkeepers are responsible for keeping track of a small business’s financial transactions and preparing reports. This gives business owners valuable insights into their company’s financial health.
There are a few critical reports that business owners should keep an eye on. The
Profit and Loss Statement (P&L) shows a company’s revenue and expenses over a period of time. This is a valuable tool for tracking the financial performance of a business.
The Balance Sheet shows a company’s assets, liabilities, and equity at a specific point in time. This helps understand the financial position of a business.
The Cash Flow Statement tracks a company’s inflows and outflows of cash. This report, although very confusing, is crucial as this report brings the accounting process and the actual cash in and out flow together.
Bookkeeper vs Accountant
Bookkeepers are an essential part of any successful business. They can help keep track of finances, prepare reports and provide insights into a company’s financial health. A bookkeeper can be a valuable asset to any small business.
A bookkeeper provides essential financial record-keeping services. This usually includes maintaining records of transactions, such as sales, purchases, receipts, and payments. Bookkeepers may also prepare reports for small businesses or individuals.
Payroll, invoicing, and a bookkeeper may also handle collections. Bookkeeping is usually done on a computer using accounting software.
An accountant can provide a range of services to businesses and individuals. These services can include auditing, preparing and filing tax returns, financial statements, etc. Accountants are highly trained professionals who are adept at handling financial matters. They can provide valuable insights and advice on various economic issues.
Meet the 21st Century Bookkeeper
With new technology, the landscape of the traditional bookkeeper has changed. The old way of doing things is no longer feasible in today’s business climate. Bookkeepers now need to be able to use new software and tools to stay ahead of the curve.
Today’s bookkeepers need to have a strong understanding of accounting principles and be able to use technology to their advantage. They also need to be able to communicate effectively with clients and coworkers.
The 21st-century bookkeeper needs to be able to generate financials, interpret reports and identify areas of need or opportunity.
To Summarize
With new technology today, a lot of the mundane tasks that were done by bookkeepers in the past can now be automated. In the modern-day era, bookkeepers need to be able to do more than just data capturing.
Today’s bookkeepers are required to be able to interpret the financials and sit down with clients/employers and discuss the financials, pull up unique reports tailored for that specific audience, and discuss those reports with the clients.
At Darwin Business Solutions we bring you the business owner just that. Contact us for a no obligation, no charge consultation if you have any questions, seeking info, need help, or if you are interested in some of our other services.
