What’s the difference between a bookkeeper and an accountant? And, which do I need?
When you started your business, you likely performed many of the day-to-day bookkeeping tasks yourself while occasionally utilizing an accountant for help with your business plan and for tax preparation. As a business owner, you may find managing your books easy to do, but it takes you away from more valuable work you could be doing with your business. At the same time, your tax planning has likely become more complicated. You know you need help. So, what are your options?
A bookkeeper can do the day-to-day hands-on tasks: completing payroll, producing invoices, paying bills, recording asset purchases and disposals, maintaining and balancing general and subsidiary ledgers, etc. He or she can also ensure that all financial transactions are recorded correctly so the business is ready at tax time. A bookkeeper may have an associate’s degree or even a bachelor’s degree, but definitely must have meticulous attention to detail.
An accountant can analyze the big picture of your financial situation and offer strategic advice. He or she can produce financial statements and prepare and file your taxes. An accountant can help you understand the impact of financial decisions. He or she will have a bachelor’s degree in accounting and typically will have one or more professional certifications (e.g. CPA, CMA, CFM, CFA, CIA).
So, which type of accounting professional do I need?
The short answer is: both. With the growth of your business, you have less time for bookkeeping; routine data entry, recording financial transactions, billing, etc. can be tasked to an employee. You also – hopefully – are recognizing the need for an accountant to help you take a strategic approach to your financial management. In order to create a sustainable competitive advantage, you must know where you are financially, where you want to be, and what action is needed to get there.
What if I’m growing even faster (or planning to)?
You might not be looking at hiring just one accountant. There are other people within the world of accounting and finance who can help you grow your business. The size and structure of your finance department should correlate with the total number of employees, revenue, industry, and overall business strategy. (Some businesses use the 50-employees-per-finance-person benchmark, but considering your industry and other factors, your ideal finance staff level could vary.) With a fully-staffed finance department, you could have a CFO at the head of the department overseeing a Controller (who manages the other accountants, the general ledger, fixed assets, and performs cost accounting functions), an Accounts Payable clerk, an Accounts Receivable clerk, a Budgeting/Forecasting Analyst, an Internal Audit & Compliance staff person, a Payroll specialist, and a Treasurer (who manages cash flow and investments).
From day-to-day management to long term strategy and planning, hiring the right accounting staff can help you keep your business on track to meet, or exceed, your goals.