It’s a common misconception that bookkeepers and accountants are one and the same. While there is often some overlap in the two roles in business, what they are actually required to do, and how they function, are quite different. They both want your company’s finances to run smoothly, and are of equal importance; just for different reasons.
The thing about bookkeeping is…
Bookkeepers maintain a company’s financial records. They are on top of the data.
You’ll find that bookkeepers are part of a business’ administration and don’t tend to make any broad or strategic decisions. If working independently or as a contractor, a bookkeeper will often consult an accountant for general professional advice.
The thing about accounting is…
Accountants interpret and analyse the financial data which bookkeepers record. They’ll advise business owners or management to make decisions to lower risks and bolster the bottom line. If they work in-house, they play a pivotal role in that company’s management team. Often it is more effective – and better value – to outsource the accountancy role, enabling businesses to benefit from their accounting firm’s expertise, without the need to employ them full-time.
Accountants aren’t financial advisors. Where a financial advisor helps grow wealth through investments, an accountant advises on tax matters and how best to structure investments.
What qualifies someone to be an accountant or bookkeeper?
University qualifications aren’t required for bookkeepers in Australia, but if they want their own business, they need to be registered as a BAS Agent, hold at a Certificate IV in Bookkeeping, or a Certificate IV in Accounting.
Accountants are often hired for one-off projects or leading up to EOFY, whereas bookkeepers usually handle daily business functions and are more often part of a company’s ongoing staff.
Accountants have university qualifications. Theirs will likely be a broader skill set, and over time they may have a sharper focus on where they work – specifically in tax, or bigger business, or SMEs, for example.
Accountants will very often work with bookkeepers, but they’re usually hired from outside the organisation as needed.
Bookkeeping, from one day to the next
A bookkeeper’s role is to oversee the ongoing financial maintenance of your business.
We asked a bookkeeper for a major chain bookstore what she does in a day:
“For me, a typical day may include dealing with the shop’s receipts, expenses, and other transactions. We have to work through the payroll system, as there are 12 people who work at this particular store.
“I’ll be managing both incoming and outgoing invoices, processing payments for things like cleaning, rent, electricity. There’s the weekly ledger balancing, I’m reconciling bank statements.
“Plus, I have to produce reports and prepare initial financial statements, calculate GST, and prepare and lodge the quarterly Business Activity Statement.”
She’s very busy, that much you can be sure of!
A day in the life of an accountant
Accountants should have a solid understanding of taxation and are the ones to provide advice about what your obligations and duties are.
We asked a small business accountant what his day looked like:
“I prepare and adjust entries, especially if the books show a discrepancy and require investigation or any special insight. A lot of time is spent analysing all the operational costs of clients’ business. I am preparing financial statements, I complete income tax returns when that time of year rolls around, and then it’s all about planning tax affairs to minimise the tax burden.
“I’ve been doing a lot of setting and measuring business KPIs this week, and there’s been a spate of highlighting those spending or revenue patterns that may affect a business. For the most part, it’s helping my clients understand what impact any financial decisions will have.”
Good accountants should be able to help make clear what can be very complex data and financial information businesses need to operate so that your decisions about the future of your business can be informed ones.
The big picture
Hire an accountant for your business, and they’ll play a more consultative and analytical role than a bookkeeper does. Their role is more strategically valuable than a bookkeeper’s. Accountants are for the bigger, long term picture, where bookkeepers are for the day-to-day stuff.
An accountant might also be able to provide advice on taxation and planning, assistance on business structures, as well as auditing, company reporting, and compliance matters. At the end of the day, they’ll help you understand how the data gathered by a bookkeeper will impact you and will then create business forecasts to direct whatever changes are necessary.
An expert accountant gives you a dedicated advisor to help you define, plan for, and meet (and with any luck, exceed!) your business growth goals, and improve your overall operations.