Should An Entrepreneur Hire A Bookkeeper or Accountant?

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The Difference Between Accountants & Bookkeepers

Accountancy BookkeepingThis is a question that every new entrepreneur considers at one time. It is an important decision especially for the entrepreneur who is used to wearing many hats and is unaccustomed to delegating responsibilities that go with a startup or small business.

The first place to begin in considering this question is to be sure you understand the difference between an accountant and a bookkeeper. There are several types of accountants but they all have taken classes in accounting and are certified at different levels. So, one distinction between an accountant and a bookkeeper is their level of education and training.

Many bookkeepers also have some amount of general education in the basics of bookkeeping and perhaps a few accounting courses. However, bookkeeping skills do not take as long to develop as do accounting skills.

Bookkeepers and accountants provide very different functions and both provide the best service when they work together in a coordinated entry system. An accountant is an expert analyst. Accountants can analyse financial statements including profit and loss statements, balance sheets and budgets and can offer analytical advice to the entrepreneur.

Bookkeepers take care of the day-to-day data entry regarding all financial transactions a business experiences. Their role is to enter transactions. If the accountant has set up the bookkeeping software correctly, then each transaction generates a great deal of data, including double entry calculations that affect the income statement and the balance sheet.

Most bookkeepers rely upon an accountant to set up the bookkeeping system so theoretically the bookkeeping functions could be provided by a number of different people who follow the accountant’s and software guidelines. Ideally, the accountant’s role is to analyse the data entered by the bookkeeper. Whereas the bookkeeper might work every day or several days a week, depending upon the size of the business, the accountant only reviews data entered every month, quarter, six months or year depending upon the company’s tax reporting status.

The relationship between the entrepreneur and the accountant and the bookkeeper is very important. To a degree, they all rely upon each other. The entrepreneur retains the accountant so that the bookkeeping and accounting systems are sound. The entrepreneur hires a bookkeeper so that all data is entered reliably and so that the entrepreneur can do the things that he or she does best, like sell, train employees or travel.

Using a good accountant as a consultant and hiring a skilful bookkeeper allows the entrepreneur to operate with the security that the financial side of the business is being accounted for in a professional, efficient and financially responsible way.

Related Articles:

At A Glance: The UK Economy in 2014 (Clark Howes)

The Difference Between Bookkeeping & Accountancy (Stress Free World)

Should I Hire An Accountant? (This is Money)

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