Ducks In A Row has helped many entrepreneurs prepare for and start their own business. One comment that nearly always comes up is, “I don’t know if I need an accountant or bookkeeper…or both.” After speaking with them for a bit, I’m no longer surprised that most people really don’t understand the difference.
Offering both services to small businesses, we have a deep understanding of this subject. So I’d like to share it with you.
For those who aren’t familiar with finances, or even those who are, figuring out what is needed for a business is difficult. There a few basic questions business owners need to answer before making a decision about a bookkeeper or accountant.
To start, we need to understand the basics. Such as the type of business you own, the industry it’s in, the number of employees you have. For example, a boutique clothing retailer with 10 employees will likely need more help than an independent freelance writer with one employee and a sub-contracted part-timer.
Once we have answers to these fundamental questions, it’s easy for us to know which one (or both) will be right for you. Which brings us back to the question we often hear, “But what’s the difference?” Let me explain.
Bookkeepers essentially help businesses keep finances in line and on track. They pay bills, review purchases and income, ensure that employees file correct paperwork for payroll, track expenses, submit invoices and, bottom line, make sure every cost is recorded and recorded correctly. Bookkeepers are often the go-to for the day-to-day expenses of a business.
While they can certainly develop a high-level of expertise (our Bookkeeper Ducks are continuously educated), state-by-state accounting boards may dictate what bookkeepers do or what they identify themselves as.
The American institute of Professional Bookkeeping can certify bookkeepers, just like accountants are certified through the American Institute of Certified Public Accountants. According to The Difference Between Bookkeeping and Accounting for Dummies, “Bookkeeping is an indispensable subset of accounting.”
While accountants have similar responsibilities as a bookkeeper, they are often responsible for the financial big picture of your business. They are specifically trained and educated to be more strategic than task-oriented. For example, they can analyze and provide strategic advice as well as prepare key financial documents including taxes.
Generally speaking, an accountant’s abilities are broader than a bookkeeper’s. Additionally, accountants typically require higher wages than a bookkeeper and may have a higher degree of education or certification.
For a small business owner who’s not that good with finances or numbers, it may be advantageous to bring on help from a bookkeeper and/or accountant from the get go; they can set up an essential financial and record-keeping system for moving forward. But don’t worry, you don’t have to make that decision yourself. We can help you determine which you’ll need…and how and when they’re needed.
Small business owners spend over five or more hours a month on bookkeeping, something a professional can do in a fraction of the time. It’s okay if you’re the type of owner who wants to keep control and do the financial work themselves, but it will be vital to your success to recognize when help from someone like Ducks In A Row is needed.
A small business can very likely get by with part-time help from a bookkeeper and may only seek the help of an accountant around tax time. For a more complex business, a full-time bookkeeper may be necessary, and an accountant may be needed to support the bookkeeper.
Similarly, if at year-end an accountant has to go back and fix mistakes in records, it may be time to enlist the service of a bookkeeper who will be more focused on the minute daily details of your business. Regardless, Ducks In A Row can help you.
And for those who decide to forego the help of a bookkeeper or accountant, it’s never too late to reevaluate your needs or seek help down the road. A lot of our customers sought our help years after realizing how much of their ability to get “real” work done had been sapped by the excessive amount of time spent internally on financial tasks.
While not every small business requires a bookkeeper or accountant, most owners find that their help saves them time and money, provides greater control over their business, and leads to a more balanced, less stressful life. So whether you need a bookkeeper or accountant, that’s what Ducks In A Row is all about helping you figure out.