If You’re Scared to Crunch Numbers, Who Ya Gonna Call?

While they can serve similar functions, there are a few key differences that distinguish the two. And though one is not necessarily better than the other, one may be a better fit for your small business—or, depending on your specific business, it may be best to use both.     

Bookkeeping

Bookkeepers, as the name suggests, are the people who manage your books, tracking your business sales and expenses. They will follow the day-to-day operations and can prepare financial statements, like profit and loss analysis. Additionally your bookkeeper may help track and process your payroll, whether in-house or using an online service.  A bookkeeper often reports to and/or works directly with a small business owner. It is also possible that your accountant might have a bookkeeper or bookkeepers that help handle client accounts.

Education wise, a bookkeeper typically has between two and four years of experience or an associate’s degree.

Accountants

An accountant’s job often encompasses the work done by the bookkeeper, and usually fulfills some of the more complex financial requirements for a small business, including preparing tax returns, pulling together documentation in the case of an audit or penalty, and providing reports like W-2 statements at year end. Accountants are able to analyze the data collected by the bookkeeper or small business owner and dive deeper into the numbers.

Perhaps the most critical distinction between accountants and bookkeepers is that accountants are able to give you financial advice. Measuring profit is one of the critical tasks that an accountant is responsible for as this can help measure the financial success of your business.

Education wise, an accountant typically has a bachelor’s degree in accounting or a related field such as finance. Accountants also often have an additional certification, such as becoming a CPA (Certified Public Accountant).

Bottom Line

If you have fairly simple requirements, such as keeping track of sales vs. inventory costs, you may find that a bookkeeper better suits your business needs. If you have goals of expanding or have a business that has more financial complexity, for example tracking salaried and hourly employees or operating in multiple tax codes you might want to lean towards hiring an accountant.

What is important is that if you feel overwhelmed or unable to keep track of your business finances that you do call someone qualified to help—the last thing you want to do is perpetuate financial errors that can result in audits and/or fines, and ultimately put you out of business.