‘Bookkeeper’ and ‘accountant’ – two words that people all over the world mistakenly interpret as meaning the exact same thing. However, when you’re running your own business, it’s important not to get the two mixed up.
While both of these professionals help you with the financial side of things, they each play distinctly different though equally important important roles. This is why it’s necessary for any business owner to know the difference – because, if you don’t, you might not be covering all bases.
So, let’s get down to business and delve into how bookkeeping and accounting differ…
What is a bookkeeper and why are they important?
Whether you’re a small start-up company or a large, multi-national corporation, you’re going to have a lot of day-to-day expenses stemming from your work. Your bookkeeper will be the person to turn to for all of these things, helping you with your financial recording as it happens throughout the year and tracking the expenses that relate to your business.
We’re not going to sugar-coat it; keeping track of your own finances can be a nightmare. The unfortunate truth is simply that most people don’t have time to keep track of all their receipts, financial information and business expenses themselves. And since all this information is particularly important at tax time, you can’t really afford to ignore it.
Your bookkeeper will:
- Calculate your GST.
- Process your receipts, invoices and payments.
- Manage accounts receivable and accounts payable.
- Establish and implement your accounting system.
This is why having a bookkeeper can be a lifesaver. Rather than logging all the information yourself, all you’ll need to do is liaise with them and they will collate it all for you. By assisting you through this incredibly long and often daunting process, most people feel as though a weight has been lifted off their shoulders.
And what about an accountant?
Now that we’ve established what a bookkeeper does, it’s important to understand the job of an accountant because each job is made that much harder without the help of the other.
Accountants will take the data that your bookkeeper has recorded and analyse, report and advise on it. They are also well-versed in taxation advice, ensuring that each year your taxes are done properly and to your benefit as much as possible.
Your accountant will:
- Audit your business.
- Manage your tax.
- Give advice on superannuation funds or financial management strategies.
Your accountant will be able to completely analyse your past, current and projected future performance of the company. This means they are often the best person to turn to when you have a monetary issue or need more information on the financial side of things.
One final note
Sometimes the responsibilities of accountants and bookkeepers can overlap, so it’s important to make sure you’re not paying two people to do partially the same job. This will help you lower your financial planning and advice spend and make the process less confusing.