Tax season can often set business owners’ hair on fire. Where are all the documents? How in the name of [insert deity of choice here] did I spend that much money? Who am I supposed to call to get all of this in order?
Does this sound like you? Don’t worry - you’re not alone.
Many business owners are wondering who to get in touch with this time of year - a bookkeeper or an accountant. Others are wondering if there’s really any difference between the two anyway. The answer is… it’s complicated. Let’s drill down into what each does, how they work together, and who you need to work with for what.
How Does a Bookkeeper Help Your Business?
If you know a bookkeeper, you know that we tend to be Type A, detail-oriented, control freaks - and proud of it. The job of a bookkeeper is to be as precise as possible when it comes to our clients’ finances. We need everything to reconcile down to the penny to ensure that our clients’ books are clean and that they’re making the most out of what’s coming in.
What we do on a daily basis often includes:
- Recording every single financial transaction made by a business, usually into an accounting program like QuickBooks
- Documenting the organization’s income and outgoing payments
- Processing expense reports and reimbursing employees as needed
- Managing payroll accounts
- Ensuring the client is following all financial record and documentation laws
- Completing journal entries in a general ledger
- Producing financial reports like balance sheets, income statements, and more
When tax season rolls around, we put all of this information together in one beautiful little package to send over to your accountant.
How Does an Accountant Help Your Business?
The biggest difference between a bookkeeper and an accountant is the necessity for formal schooling. Accountants generally need to receive a four-year degree from a university, followed by sitting the Certified Public Accountant (CPA) exam. The exam is grueling because the job is tough and leaves zero room for error.
It is possible, though, for an accountant to choose not to sit the CPA exam but either way, they need to be registered with the IRS as a tax preparer, may require a special license, and have to continue their education annually to ensure that they are up to date with the most recent tax laws.
Your accountant’s primary jobs include:
- Filing tax returns
- Assisting with audit requests and interactions with the IRS
- Ensuring that you’re following all tax regulations and laws
- Creating and implementing a tax strategy customized for you
Where They Overlap - And Why You Still Need Both
The top places that accountants and the best bookkeepers overlap are assisting with budgets, financial planning, and advice in regard to the business and predicting how expense decisions will impact company finances.
Some accountants also do bookkeeping work and they often do a terrible job of it. But you still probably don’t want them to do your bookkeeping unless you have a wealth of disposable income. That CPA certification costs money and comes with a HEAVY premium. Accountants often charge by the hour.
It might seem counterintuitive to hire someone else to handle your bookkeeping, but it will actually save you money in the long run. Plus, it’s worth nothing that both accountants and bookkeepers are valuable parts of your business advisory team.
Your bookkeeper should focus on transaction entry, reconciliations, and regular reports while your accountant focuses on the overall tax strategy and how your business finances fit into your overall financial picture.
At Hill Bookkeeping, we also handle some traditional “accountant-type” tasks. A big portion of what we do is consulting. Since we already know what your money is doing down to the penny, we can give you educated feedback on where your money is going and how you can start better streamlining your expenses to save some cash.
TL;DR: Bookkeepers and accountants have roles that sometimes overlap, but typically, accountants handle your taxes and high-level finances while bookkeepers are here to handle all the little details. If you have more questions for us, reach out today. We’d love to talk you through what we do and how we can help you streamline your finances.