Bookkeeping and accounting are both essential to keep your small business running and in good financial order. While both bookkeeping and accounting are involved in your financial operations, they are not the same, and are often not done by the same person. But there’s no reason your CPA can’t also become your bookkeeper! In fact, there are a ton of benefits to this.
What is the Difference Between Bookkeeping and Accounting?
The roles of a bookkeeper and accountant may appear similar. In fact, many people use ‘bookkeeper’ and ‘accountant’ interchangeably. However, there are some crucial differences between them.
The Role of Your Bookkeeper
Your bookkeeper works at a micro-level in your company. He or she records your day-to-day financial transactions and maintains a complete record of your expenses and income. A bookkeeper’s duties include:
- Recording financial transactions
- Posting debits and credits
- Producing invoices
- Maintaining and balancing subsidiaries, general ledgers, and historical accounts
- Completing payroll
Many small business owners do not have a bookkeeper. Instead, they choose to do their books on their own. But there’s a lot of information to record, and bookkeeping may not be something you enjoy or even understand. This may make it necessary for you to hire a bookkeeper for your small business.
The Role of Your Accountant
Your accountant works at a more macro-level in your company. He or she looks at the every day operations and records of your business and uses them to perform year-end work and make business recommendations. An accountant’s duties include:
- Completing income tax returns
- Preparing and issuing financial statements
- Analyzing costs of operations
- Preparing adjusting entries
- Aiding the business owner in understanding the impact of financial decisions
An accountant can help your small business navigate complex, high-value projects. They offer specialized advice that you as a business owner may need to make good business decisions.
How do These Roles Work Together?
After reading about these roles, it’s clear that while accounting and bookkeeping are different tasks, they are complimentary. A bookkeeper records and organizes your data, while your accountant works to analyze and summarize all the information your bookkeeper provides. In essence, your bookkeeper provides the building blocks for your accountant to work from.
Using your CPA as Your Bookkeeper
For a small business it makes sense to have a bookkeeper and accountant rolled in to one.
Most people agree, it is ideal for your bookkeeper to work closely with your accountant. Why not have your accountant also act as your bookkeeper? Some companies like Schwan & Associates offer bookkeeping and accounting services combined. This saves your company time and money, as the same person knows your business’ financial operations inside and out.
Your accountant relies on a clear recording of your day-to-day operations in order to do their job. They rely on and work directly with your bookkeeper in order to support your business. In fact, having an accountant who is already familiar with your daily operations can help them better navigate your financial data. They will be able to more quickly and efficiently analyze your business operations, look at operation costs on an ongoing basis, and can even offer more comprehensive advice in financial situations to help your business grow.
Are you ready to hand over your bookkeeping to your accountant? If you’re interested in having your CPA also work as your bookkeeper, get in contact with a Schwan & Associates CPA today.