Small businesses have a range of different financial obligations to consider. While it would be ideal to have a single entity covering all of these functions, it is not always possible.
These types of organisations typically also find they will need to employ the services of an accountant and a bookkeeper for different services, with both covering a range of different financial requirements.
So, which one should you employ for which job? Here is a rundown of the key roles of both accountants and bookkeepers and when you should enlist them.
When to use a bookkeeper
At the heart of their role is maintaining your general ledger. A bookkeeper can record all of your financial transactions – including sales, payments and receipts – as well as keeping a running list of credits and debts. They will also maintain your general ledger through each accountancy cycle and (in some cases) take on HR roles like producing invoices and completing payroll.
When it comes to the general financial maintenance of your business, there is not much these professionals can’t do. Through advanced software, the lines between accountants and bookkeepers are blurring and their role is about much more than just data entry in the modern world. They’re also vital to have on hand year-round, allowing you to identify, measure and record all of your financial transactions and ensure the entire system is running smoothly.
When to use an accountant
While bookkeepers can do most of your general account management throughout the year, there are times when a dedicated accountant is required.
Small business accounting is vital when it comes to business tax and completing your annual obligations. Only these professionals can prepare financial statements and carry out your business tax advisory roles. They’re also the ones that will file your tax return.
The information collated in this process is used for far more than just this, though, as it is vital for the ongoing health of your business.
Throughout the year, they will seek out any transactions that may not have been recorded and make the necessary adjustments; carry out the analysis of your business and help put together data that will give you a clear position on where you stand financially.
In the long-run, this will help your small business grow, by giving you the data you need to make spending decisions for the next financial year. It’ll also highlight areas of concern where you can improve.
Every small business should enlist the services of both a bookkeeper and an accountant at some stage. For the year-round obligations and data recording, your bookkeeper is well equipped to complete this task while also taking care of your invoicing and payroll.
But when it comes to tax time, it is vital to employ the services of an accountant so you can get the best possible return for your business and a snapshot of your financial situation. In the end, this will allow you to keep everything smooth-sailing and in the green.